Port Hawkesbury Paper used 'unfair competition,' U.S. body rules

The United States Commerce Department ruled Wednesday the Port Hawkesbury Paper mill should pay a duty of 20 per cent on the supercalendered paper it exports to the U.S.

The same ruling applies toIrving Pulp and Paper and Resolute FP.

American companies had complained that Nova Scotia government loans and discounted power rates to Stern Partners the company that runs the mill amounted to unfair competition.

The investigation flowedfrom an unfair competition complaint brought under the North American Free Trade Agreement (NAFTA) bya few Americanmills.

It sets the way to levyduties onsupercalendered paper, glossy paper used for magazines and catalogues.

The ruling could cost the company millions of dollars, if it's upheld by the U.S. International Trade Commission. That ruling will come on Dec. 4.

One of the complaining U.S. paper mills, Verso, is the former owner of NewPage, which received provincialsubsidies when itoperated in Port Hawkesbury.

Port Hawkesbury Paper has been setting aside money to pay duty, which could cost up to $50milliona year.

A preliminary ruling this Julysaid the mill received subsidies in the form of discounted power rates and a $124-million provincial aid package when it changed hands three years ago.

Both the mill and the province challenged the ruling, arguing power rates which account for 70 per cent of the duty are nota government subsidy.

Port Hawkesbury Paper said the commerce department miscalculated its electricity costs, and included subsidies given to the previous mill owner. In June, the mill said it would appeal all the way to the World Trade Organization.

"PHP intends to continue to vigorously defend against the findings of subsidies and theduty, which are without merit," Marc Dube,PHP Development Manager, wrote in a media release.

"The mill's legal team will review in detail the decision by the DOC and focus onpreparations and defense before the U.S. International Trade Commission (ITC) inNovember."