Canadian government calls new U.S. duties on newsprint 'unjustified'

Newsprint is the latest Canadian product to be hit with preliminary countervailing duties from the United States, a move criticized in a joint statement issued by Foreign Affairs Minister Chrystia Freeland and Natural Resources Minister Jim Carr.

U.S. Department of Commerce slaps overall tariff of 6.53 % on about 25 Canadian plants

Newspaper front pages are displayed at the Newseum in Washington on July 10, 2017. Newsprint is the latest Canadian product to be hit with preliminary countervailing duties from the United States. (Carolyn Kaster/Canadian Press/AP)

Newsprint is the latest Canadian product to be hit with preliminary countervailing duties by the United States.

The U.S. Department of Commerce slapped an overall tariff of 6.53 per cent on about 25 Canadian plants, mostly in Quebec and Ontario, following an investigation that began in August 2017.

"Today's preliminary decision allows U.S. producers to receive relief from the market-distorting effects of potential government subsidies while taking into account the need to keep groundwood paper prices affordable for domestic consumers," said Wilbur Ross, commerce secretary.

"The Department of Commerce will continue to evaluate and verify the accuracy of this preliminary determination while standing up for the American business and worker."

Canada is the largest exporter of newsprint in the world, with a market dominated by Resolute Forest Products, Kruger and Catalyst Paper Corp. of British Columbia.

Resolute faces a preliminary duty of 4.42 per cent while the Catalyst Paper duty is 6.09 per cent, Kruger's is 9.93 per cent and the White Birch duty is 0.65 per cent.

The U.S. Department of Commerce will make another decision on anti-dumping duties in March and the U.S. International Trade Commission will be asked to rule on the two measures in August.

In a joint statement, Foreign Affairs Minister Chrystia Freeland and Natural Resources Minister Jim Carr called the duty rates "unjustified."

"Any duties will have a direct and negative impact on U.S. newspapers, especially those in small cities and towns, and result in job losses in the American printing sector," the ministers said in a statement.

"We will continue to work with our forest industry, provinces and territories, and communities across Canada to defend this vital sector against unfair and unwarranted U.S. trade measures and practices."

'Grotesque example of protectionism'

The U.S. government began investigating Canada's newsprint industry after Washington-based North Pacific Paper Co. complained Canada was dumping newsprint into the American market and unfairly subsidizing its industry at home.

It is the same argument made regarding Canada's softwood industry, which led to the imposition of both countervailing and anti-dumping duties on most Canadian softwood exports to the United States.

Perrin Beatty, president of the Canadian Chamber of Commerce and former Conservative cabinet minister, blasted the decision on social media.

Resolute Forest Products spokesperson Karl Blackburn called the duties "completely unfair and unjustified" and Denis Lebel, the president and CEO of the Quebec Forest Industry Council, calls them "absolutely unfounded."

The U.S. Department of Commerce says Canada exported about $1.6-billion worth of newsprint to the U.S. in 2016.

The new duties comes as Canada and the U.S. continue to try to negotiate a trade settlement on softwood to replace the deal which expired in 2015. Canada is also seeking relief from the softwood duties in appeals through the North American Free Trade Agreement and the World Trade Organization.