NORPAC’s Tariff Debate

In the July 26, 2018 edition, OTW published an article titled "U.S. Lawmakers, Printers and Publishers Testify Against Import Tariffs on Canadian Newsprint". Below is an article that provides information from another perspective.

NORPAC’s Tariff Debate

By Ted Sprague, CEO, Cowlitz Economic Development Council

Everyone’s talking about tariffs? Tariffs have been a part of the United States’ fiscal policy as far back as 1789 when the government relied heavily on tariffs to pay for its debt. Over the past few months, the Trump administration has brought tariffs back into the conversation with some headline grabbing decisions. There is a distinct difference in tariff policy between tariffs that protect American industry from foreign government subsidies and tariffs that seem punitive for political purposes.

In August of 2017, NORPAC, one of the largest private employers in Cowlitz County petitioned the U.S. Department of Commerce to begin applying tariffs to newsprint imported from Canada due to the harm caused by the subsidized, dumped newsprint flowing into the U.S. The Department of Commerce determined there were no less than 46 subsidy programs in place, which allowed Canadian newsprint to be sold in the U.S. at an artificially low price. Not surprisingly, once the tariffs were put in place, the market stabilized and NORPAC was able to restart one of its three paper machines and rehire many of the employees that had been laid off the year prior.

Recently I was privileged to travel to our nation’s capital to testify at the International Trade Commission (ITC) hearing where these tariffs were discussed. It was acknowledged by both sides of the argument that newsprint manufacturing in the U.S. has taken a huge hit in recent years and cannot keep up with demand. Not surprisingly, Canadian manufacturing of newsprint is at an all-time high, with many Canadian firms buying U.S. manufacturing and moving it north. Hmmmmmm.

One does not have to look too far to determine why this is – remember the 46 Canadian subsidies for Canadian manufacturing? It was disheartening to hear our own U.S. Senators and members of Congress testify against U.S. manufacturing all to save $.01 on each printed newspaper. The highest cost for newspapers is labor, the second highest is newsprint and newsprint costs are at historically low levels. The impacts NORPAC has on Cowlitz County both in terms of employment and economics are significant. NORPAC is responsible for $40 million in salaries and wages paid annually. It spends tens of millions on maintenance cost every year, which helps support local labor, materials suppliers and local contractors. It supports our state and local tax base by paying more than $10 million in state taxes and $7 million in local taxes annually. It spends $65 million on transportation services and about $100 million per year on locally sourced raw materials.

I understand some people disagree with tariffs as a policy, but the policy is in place for a reason. When a case is so egregious that one of the world’s most modern and efficient paper mills cannot compete against subsidized products, some remedy must be found. We will learn at the end of August the decision by the ITC.