USW Welcomes First Step, Calls for Further Action by Congress

For the first time ever, the Commerce Department today decided that countervailing duty law could be applied to non-market economies, possibly leading to new duties on imports of high-gloss paper from China.

Today’s decision reflects the fact that the Administration’s prior practice

of refusing to hold non-market economies such as China responsible for granting illegal subsidies is no longer viable in the face of mounting political pressure to address the pervasive unfair trade practices that contribute to the loss of U.S. jobs and the ballooning trade deficit.

The decision came in response to challenges brought by NewPage Corporation and the United Steelworkers (USW) alleging that China massively subsidized its paper industry, allowing it to swamp the U.S. market with cheap imports, costing U.S. jobs and damaging the economy.

“It’s a first step and it only came about because we made a helluva strong case,” said USW President Leo W. Gerard.  “But there’s still a long way to go if we want to make meaningful and lasting changes to our trade policies.”

“China has massively subsidized its industries to create an export platform that is swamping our market with imports, swelling our trade deficit, and destroying good jobs,” Gerard declared.  “Today’s decision to apply countervailing duties against Chinese products is long overdue, and it finally makes China subject to the same rules that all other major global traders are required to follow.”

“The Administration’s decision only comes after years of public outcry over Chinese subsidies,” Gerard noted.  “We will be working closely with Congress to ensure that the guidelines governing these countervailing duty cases against non-market economies provide for meaningful relief from China’s rampant cheating. Congress needs to take control of our nation’s trade agenda and fight for polices that protect American workers and the environment.” 

While the Commerce Department has finally opened the door to combating unfair subsidies in China, it remains to be seen how the Administration will handle illegal paper subsidies in Indonesia. The Steelworkers and the Sierra Club, who have formed a Blue Green Alliance, are part of a related case that calls on the Department of Commerce to address unfair subsidies from illegal logging in Indonesia that undercuts the U.S. paper industry. United Nations studies have shown that up to 88% of logging in Indonesia is done in violation of that country’s own timber harvesting laws.

“When other countries refuse to enforce environmental rules to give their exporters an advantage, the result is a devastating impact on the health and welfare of the people in that country,” said Dave Foster, Executive Director of the Blue Green Alliance. “But there is also a clear and direct impact on trade, production and jobs here in the U.S. and we expect Commerce to investigate these environmental practices as well.”

Now that the Commerce Department has taken the first step by providing tools to cope with unfair trade by China, Foster said, it needs to ensure those same tools can be used effectively to improve trade arrangements with other countries such as Indonesia.

In 2007, just over 9,800 USW-represented jobs remain at 22 paper mills that produce CFS in 13 states; a drop of 19 percent in just three years. The USW currently has 130,000 workers in the paper and forestry products industries, which is about 60,000 jobs less since 2002.  Most of the larger capacity CFS mills are in Maine, Michigan, Minnesota and Wisconsin. CFS is used in glossy magazines, catalogs and annual corporate reports.