A simmering trade dispute over imports of Canadian paper threatens to throw thousands of Americans out of work and cripple the ability of some newspapers to keep the public informed. The only winners in this dispute would be the partners in a New York City hedge fund.
One Rock Capital Partners recently bought North Pacific Paper Company (NORPAC), located in Longview, Wash. In a shameless attempt to manipulate U.S. trade policy, the company is asking the Department of Commerce to impose a 50 percent duty on imports of Canadian uncoated groundwood paper. The material is primarily used for newsprint and book publishing.
An adequate supply of newsprint at a reasonable price is critical to the survival of small newspapers across the country that deliver community news and information. Those papers are struggling to fulfill their mission against the backdrop of fast-moving technology. Major newspapers, which use millions of dollars worth of newsprint each year, would also take a hit.
Duties are usually imposed to save jobs that are being lost because of illegal dumping of goods in the U.S. In this case no dumping is going on, and the duties would cost many jobs, not save them.
More than 1,100 newspapers across the country have signed a letter calling on Commerce Secretary Wilbur Ross to “heavily scrutinize” NORPAC’s petitions, citing the ways in which it would hurt the industry and readers while benefiting a single company. The letter said the petitions “are based on incorrect assessments of a changing market, and appear to be driven by the short-term investment strategies of the company’s hedge fund owners.”
In a sign of how phony the dumping charge is, NORPAC’s effort is opposed by other U.S. producers of newsprint and by the organization representing the broader U.S. paper industry, the American Forest and Paper Association.
David Chavern, president and CEO of the News Media Alliance, said NORPAC is incorrectly attributing the “steady decline in the newsprint market” to a “trade matter,” as opposed to citing industry challenges. Those challenges include a disruption in the retail sector and a “decade long” shift toward digital media by readers and advertisers leading to a 30 percent decline in print newspaper subscriptions.
Canada is the world’s biggest source of newsprint, and the U.S. is its top customer. There is no way for U.S. paper mills could meet demand for newsprint, no matter what price was charged for the Canadian product.
But raising the price of newsprint significantly could be the death knell for many small publications and impose an unfair burden on the industry as a whole. Small newspapers in rural areas are often the main source of information for their communities. With no nearby TV or radio stations, those papers are a key piece of the fabric of the community.
Countering the newsprint duty would require newspapers to raise subscription and advertising prices, which would only accelerate the industry’s decline, or reduce staff and hobble newspapers’ ability to inform readers and keep an eye on government. The internet is responsible for much of the loss of readers and revenue suffered by newspapers, but the internet cannot replace the hard work of trained journalists in keeping the public informed.
The attempt to couch this misguided effort as antidumping should be seen for what it is: one company’s attempt to corner a market at the cost of an entire industry.