The United States International Trade Commission has determined that there is a “reasonable indication” that paper produced at Canadian mills operating with government subsidies has “materially injured” paper manufacturers in Madison and elsewhere in the U.S.

The five-member panel on Friday voted 4-0, with one member not participating, to allow the Commerce Department to continue an investigation into the import of supercalendered paper produced with the benefit of Canadian government subsidies. A determination is expected by May 22 on whether the paper imported from Canada will be charged higher import fees to offset the price advantage resulting from the subsidy. Supercalendered paper is a specialty paper used for glossy magazines, catalogs, and other publications.

Madison Paper Industries joined with a Minnesota mill that produces the specialty paper to form a coalition called Fair Paper Imports and filed a complaint with the commission in January. The U.S. firms claimed that subsidies provided to Port Hawkesbury Paper by the government of Nova Scotia allowed that company to undercut prices offered by Madison and the Duluth Mill in Minnesota. The U.S. coalition asked the trade panel to recognize that $125 million in subsidies allowed the Canadian company to under-price products made in Madison and Minnesota.

The American companies claim that the subsidy violates World Trade Organization guidelines, a claim Port Hawkesbury has repeatedly denied.

Madison Paper Industries is owned jointly by UPM-Kymmene Corp. of Finland and the New York Times Co., which buys 4 percent of the mill’s output, according to the company’s annual report to the Securities and Exchange Commission.

U.S. Senators Susan Collins and Angus King, and U.S. Rep. Bruce Poliquin released a joint statement Friday applauding the vote by the commission “to continue investigating the unfair trade subsidies Canadian supercalendered paper producers are receiving from the Canadian government.”

According to the press release, following the vote, the U.S. Department of Commerce will move forward as well with its investigation into subsidies.

The members of Congress and Maine paper company leadership have previously said that Canadian producers of supercalendered paper, such as the Port Hawkesbury paper mill, are benefiting from subsidies from the government at the expense of U.S. producers like Madison Paper Industries and Verso Corporations.

Madison Paper halted production for two weeks in January and temporarily laid off more than 100 workers. In announcing the furloughs, company cited “unfair” competition from the Port Hawkesbury mill as the factor contributing to the slowdown.

Port Hawkesbury Paper representatives have said little publicly about the dispute, other than to deny violation of World Trade Organization rules.