Nova Scotia

Port Hawkesbury Paper used 'unfair competition,' U.S. body rules

The United States Commerce Department today ruled the Port Hawkesbury Paper mill should pay duty of 20 per cent on the supercalendered paper it exports to the U.S.

U.S. Commerce Department decision could cost N.S. company millions of dollars

Rolls of paper made in the Port Hawkesbury Paper mill could face a 20 per cent duty to be shipped into the United States. (CBC)

The United States Commerce Department ruled Wednesday the Port Hawkesbury Paper mill should pay a duty of 20 per cent on the supercalendered paper it exports to the U.S.

The same ruling applies to Irving Pulp and Paper and Resolute FP. 

American companies had complained that Nova Scotia government loans and discounted power rates to Stern Partners — the company that runs the mill — amounted to unfair competition. 

The investigation flowed from an unfair competition complaint brought under the North American Free Trade Agreement (NAFTA) by a few American mills.

It sets the way to levy duties on supercalendered paper, glossy paper used for magazines and catalogues.

The ruling could cost the company millions of dollars, if it's upheld by the U.S. International Trade Commission. That ruling will come on Dec. 4. 

One of the complaining U.S. paper mills, Verso, is the former owner of NewPage, which received provincial subsidies when it operated in Port Hawkesbury.

Port Hawkesbury Paper has been setting aside money to pay duty, which could cost up to $50 million a year.

A preliminary ruling this July said the mill received subsidies in the form of discounted power rates and a $124-million provincial aid package when it changed hands three years ago.

Both the mill and the province challenged the ruling, arguing power rates — which account for 70 per cent of the duty — are not a government subsidy.

Port Hawkesbury Paper said the commerce department miscalculated its electricity costs, and included subsidies given to the previous mill owner. In June, the mill said it would appeal all the way to the World Trade Organization. 

"PHP intends to continue to vigorously defend against the findings of subsidies and the duty, which are without merit," Marc Dube, PHP Development Manager, wrote in a media release.

"The mill's legal team will review in detail the decision by the DOC and focus on preparations and defense before the U.S. International Trade Commission (ITC) in November."

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