Industry, labor, politicians applaud Commerce decisionBy Peter A. Buxbaum, AJOTEarlier this year, the US Department of Commerce announced preliminary decisions to apply countervailing duties to some paper imports from China. The decision is particularly significant because it represents the first time the US has considered applying countervailing duties to imports from a non-market economy. From 2005 to 2006, imports of coated free sheet paper products from China, the specific commodity made subject to the countervailing duties, increased approximately 177% in volume, and were valued at an estimated at $224 million in 2006, according to Commerce Department statistics. Coated free sheet paper is in used magazines, brochures, and other high-end commercial printing applications. The Commerce Department’s preliminary decision determined that Chinese producers and exporters of coated free sheet paper received subsidies subject to countervailing duties ranging from 10.90 to 20.35%. US Customs and Border Protection has been collecting cash deposits or bonds from importers of the subject to the investigations. Commerce is also investigating the applicability of countervailing duties to imports of coated free sheet paper from Indonesia, and South Korea. Commerce is expected to announce its final determinations by mid-October. The Commerce decision received praise from many quarters, including US manufacturers and labor organizations, who believe the decision will slow the tide of Chinese imports to the US and protect domestic jobs. The Commerce decision was precipitated by an October 2006 complaint from NewPage Corporation, a producer of coated papers based Dayton, Ohio, and an employer of 4,300 workers in North America. NewPage alleged that several Chinese companies were recipients of subsidies such as tax breaks, debt forgiveness, and low-cost loans. The complaint asked the Commerce Department to reconsider its long-standing policy of not applying the anti-subsidy law to China. The Department of Commerce has the legal authority to apply the countervailing duty law to non-market economies, but, in 1984, adopted a policy of not applying that law to non-market economy countries. The department reasoned that subsidies had no real economic impact on Communist-run economies. “We are pleased with the department’s preliminary determinations,” said Mark A. Suwyn, chairman and CEO of NewPage. “This confirms what we have been experiencing in the marketplace: unfairly subsidized imported coated free sheet paper that has led to artificially low prices.” Suwyn noted that NewPage has pending anti-dumping cases before the Commerce Department against China, Indonesia, and South Korea. “We believe that affirmative determinations in these cases will be a significant step toward restoring free trade to our industry,” he said. The application of the countervailing duty law to China should make a significant difference for US companies and workers, according to Gilbert Kaplan, a partner at the Washington, DC, office of the law firm of King & Spalding. “China is a major participant in the global marketplace,” he said, “and it should not be exempt from the laws that ensure fair trade.” Manufacturers and labor organizations were also enthusiastic about the Commerce decision. “The decision is a rifle-shot action that allows Commerce to focus on specific areas of China trade that are unfair, mitigating pressures for across-the-board actions,” said Frank Vargo, vice president for international economic affairs at the National Association of Manufacturers. “American manufacturers have long pointed to these subsidies as unfair trade practices and it is refreshing to see our government moving ahead on this.” Vargo argued that the application of countervailing duties does not represent the imposition of punitive tariffs. “They are limited to that level of import duty needed to offset the subsidy that shouldn’t have been there in the first place,” he said. “A fighting chance to compe