Madison Paper Industries has joined with a Minnesota-based producer of supercalendered paper to file a formal complaint with two U.S. government agencies against a Canadian mill that they say is hurting the U.S. market.

The complaint, filed Thursday with the U.S. International Trade Commission and U.S. Department of Commerce by the Coalition, seeks higher import duties on the special publishing paper made by Port Hawkesbury Paper in Nova Scotia.

The filing is on behalf of Fair Paper Imports, a partnership between Madison Paper Industries and Verso Corp.’s Duluth Mill in Duluth, Minn., according to a letter from Madison Paper President Russ Drechsel to Maine’s congressional delegation.

“We’ve been talking about this issue over the last two years and we finally have the data required to file” the complaint, Drechsel said Friday. “We’re hopeful that the case result will be a level playing field for American producers and workers.”

Last month, more than 100 employees were temporarily laid off at Madison Paper Industries and mill officials cited as a top factor Nova Scotia’s assistance to Port Hawkesbury, saying it enabled the rival mill to flood the market with cheaper paper at prices bolstered by “unfair” subsidies.

Executives at Madison Paper said they have been working for about two years to bring the focus of the U.S. officials to a $125 million funding package that the Nova Scotia government granted to Port Hawkesbury Paper in 2012 to restart the mill, Drechsel said.

In a U.S. Senate hearing on Thursday, U.S. Secretary of Commerce Penny Pritzker responded to an inquiry from U.S. Sen. Susan Collins, R-Maine, by promising that the Commerce Department will keep the congressional delegation updated on the status of the complaint, although there are rules about what and how much they can say at various steps of the process.

The complaint asks the U.S. government to impose higher duties on Port Hawkesbury products coming into the U.S. to effectively make up for the benefits of the government subsidy in Canada.

Marc Dube, development manager and spokesman for Port Hawkesbury Paper, couldn’t immediately be reached for comment Friday. Port Hawkesbury has previously refused to comment on the subsidy complaint, and has said it’s “completely false” that the $125 million aid package violated World Trade Organization rules.

Levying the additional import fees means the U.S. government must be satisfied the paper companies can prove the claim that the aid to the Canadian mill is made up of subsidies, or assistance that would not be available to other businesses.

Under federal law, so-called countervailing duties can be imposed when it is determined that another country is providing a subsidy on merchandise imported or sold in the United States and an American industry is “materially injured, or threatened with material injury.”

The commerce secretary told the Senate committee that the agency would investigate the claims promptly.

“Ensuring a level playing field is one of our top priorities at the International Trade Administration and enforcing trade laws is something that is very important to me personally,” Pritzker said at the Senate hearing. “We will keep you as informed as possible.”

Verso and Madison Paper were not able to file a complaint sooner because they did not have necessary data to prove the damage the restart of the Canadian mill has done to the U.S. market, he said.

The Canadian mill produces about 360,000 tons of paper each year while Madison produces about 200,000, according to the Maine Pulp and Paper Association.

“The oversupply from Canada of low-priced supercalendered paper was a principal factor in Madison Paper Industries’ decision to take two weeks of unscheduled production downtime in January and early February of this year, when our production workers were temporarily laid off,” Drechsel wrote in the letter. “As long as the subsidies in Canada persist, the health of the U.S. industry is in jeopardy.”

Rachel Ohm — 612-2368

[email protected]

Twitter: @rachel_ohm


Only subscribers are eligible to post comments. Please subscribe or to participate in the conversation. Here’s why.

Use the form below to reset your password. When you've submitted your account email, we will send an email with a reset code.