DaytonDailyNews.com

DAYTON — The U.S. Department of Commerce has agreed to begin imposing trade sanctions against China's imports of glossy paper products stemming from a petition filed in October by Dayton-based NewPage Corp.

The decision reverses a 23-year-old U.S. policy that had excused China, as a nonmarket economy, from being held subject to anti-subsidy laws.

The move will result in tariffs ranging from 11 percent to 20 percent being applied to China's imports of coated free-sheet paper as a penalty for subsidies the Chinese government has provided its own companies, said Mark A. Suwyn, chairman and chief executive officer for NewPage.

"To think that someone can produce (paper) product in China using imported pulp from Brazil, import it here and still have lower costs is nonsense. It doesn't fit," Suwyn said. "We'll compete with anybody in the world, as long as we have a level playing field."

The tariffs will be imposed immediately and are subject to further review by the Commerce Department.

The preliminary decision "will give heart to a whole host of industries that are facing similar circumstances," Suwyn said.

To that end, the United Steelworkers, which teamed with NewPage in filing the petition, has been in discussions with "a number of companies" in the steel industry and in other paper-product sectors, said USW President Leo Gerard.

"China has developed a highly, highly subsidized and mercantilistic economy that is eating up, unfairly, a number of our key industries," Gerard said. "China's steel industry wouldn't be what it is today if it wasn't for the very, very huge amounts of government subsidies of every kind that are provided. ... We're not going to sit idly by."

As part of NewPage's petition, the company also has asked that imports from Indonesia and South Korea be reviewed for violation of trade laws.

The Sierra Club, the third party to sign on to the petition, wants the government to treat lax enforcement of environmental laws in other countries as a subsidy that the U.S. could counter with duties on imports.

Specifically, the club wants the government to investigate whether Indonesian paper companies benefit from using "illegally logged" timber.

A decision is expected to be made public by Monday, a Sierra Club spokes woman said Friday.

Based in Dayton, NewPage has 250 local employees among 4,300 workers across the nation.

Staff Writer Thomas Gnau contributed to this report.

History of the NewPage petition

In October 2006, Dayton-based NewPage Corporation asked the Department of Commerce to reconsider its long-standing policy of not applying the anti-subsidy law to China.

NewPage alleges that several Chinese companies that produce coated free-sheet paper products were recipients of subsidies such as tax breaks, debt forgiveness and low-cost loans. 

In 2004, there were about 12,150 steelworker jobs at 22 U.S. mills that made coated free sheet paper, according to the Sierra Club and United Steelworkers of America, which both joined NewPage in the case. Most recent data estimates that 9,800 of those jobs remain.

From 2005 to 2006, imports of coated free-sheet paper products from China increased by about 177 percent in volume and were valued at an estimated $224 million in 2006. 

The petition marks the first time since 1991 that a U.S. company formally requested the commerce department to countervail a nonmarket economy, such as China.