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‘International’ trade disputes quickly turn ‘local’ for Washington State

A recent trade dispute involving Canada and the United States is over foreign producers of paper products that include newsprint.
A recent trade dispute involving Canada and the United States is over foreign producers of paper products that include newsprint. AP

Another week, another trade dispute.

The latest entry is another on the growing list of trade cases involving a Washington-based company, an industry with significant presence in the state or a product made here. In this case it’s all three.

And it’s another case involving our northern neighbor, with which we’re building quite the portfolio of trade spats.

This time, it’s about paper.

North Pacific Paper Co., based in Longview, has filed two cases with the International Trade Commission (a unit of the U.S. Department of Commerce), targeting Canadian producers of uncoated groundwood paper, a term that includes newsprint and book-publishing, directory, printing and writing paper.

Norpac was formerly a joint venture between Weyerhaeuser and a Japanese company until it was sold to a private equity firm last year.

“We believe that Norpac and other U.S. producers have suffered greatly as a result of the unfair trade practices engaged in by Canadian producers and their governments,” Craig Anneberg, president of the company, said in a statement. “Canadian federal and provincial governments provide significant assistance to Canadian UGW producers.

“While demand for all types of printing and writing papers is in a long-term decline, the burden of dealing with these declines has fallen disproportionately on Norpac and U.S. producers.”

The filings allege that Canadian producers receive a variety of subsidies from their governments, and are dumping product in the United States at less than fair prices.

If that sounds at all familiar, it’s because those same arguments are being made in the Canadian softwood lumber case, which the ITC has accepted and has imposed countervailing duties on imports from up north.

(As an aside, if the point of such cases is to bring price relief to U.S. lumber producers, then they’re getting some at the moment, although hardly in the way they intended. Wildfires in British Columbia – the same ones that produced gray skies and colorful sunsets in Western Washington – have forced mill closures in B.C. and helped drive up prices.)

The ITC hasn’t decided yet whether to take on the paper case, but the stakes are considerable, at least in this Washington. At least two mills in Eastern Washington make newsprint. Norpac announced recently it is idling one of three papermaking machines at Longview (although it plans to increase production capacity on the other two). Layoffs could be coming in a workforce of 400.

If the commission does investigate the impact of imports on the U.S. paper market, it will have to determine the root cause of that market’s troubles – whether it’s imports or simply a matter of too many competitors battling for share in a shrinking market (you might have heard that American newspapers are not what they once were.)

And if it doesn’t, it will still have its docket full. There’s the softwood lumber case. Boeing has a case with the commission alleging illegal subsidies and unfair pricing on the part of Canadian commercial-aircraft manufacturer Bombardier.

Elsewhere, American dairy producers such as Darigold are complaining about Canadian pricing policies they say harm export sales of their products. And negotiations are just beginning on revisions to the North American Free Trade Agreement.

While “do something about trade and imports” has made for good campaign talking points, for both political parties, the frustration with such cases is that they take forever to litigate and rarely reach even an official ending, as those who have tracked the endless rounds of Boeing-vs.-Airbus know.

The prior U.S.-Canada softwood lumber agreement was supposed to settle things for a decade, but once it expired the fight flared up again as though there’d never been a settlement.

The challenge is not just that deciding who is at fault is complex (the dirty and not so little secret of trade is that everyone subsidizes favored industries, the issue being to what extent and in what form.)

Trade disputes also get tangled up in domestic and global politics.

Advocates of the domestic aluminum (another industry in Washington has a presence in) and steel industries want the Trump administration to pull the trigger on trade cases with China. There’s speculation that one reason the administration hasn’t is that it wants to maintain some leverage with China on the issue of its client state, North Korea.

But everyone had better get used to the challenges and frustrations, because the current cases aren’t going away, and more are coming. American tech companies are already entangled in international trade disputes, and those will multiply along with their reach and power.

The enduring mantra in Washington of what a globally oriented and trade-dependent state we are means we get the downsides as well as the benefits, in jobs and sales of our products and services.

Whatever else is happening at the moment in markets for Washington apples, wheat, lumber, paper, airplanes or software, the international trade in arguments has never been more robust.

Bill Virgin is editor and publisher of Washington Manufacturing Alert and Pacific Northwest Rail News. He can be reached at bill.virgin@yahoo.com.

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