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Sen. Franken Fights to Protect Minnesota Paper Jobs from Unfair Canadian Competition

Senator presses Administration to prevent illegal subsidies to Canadian paper; Subsidies could jeopardize jobs in Duluth, Grand Rapids

Friday, December 21, 2012

Today, in an effort to protect Minnesota's $8 billion forest products industry, U.S. Sen. Al Franken (D-Minn.) pressed the Obama Administration to prevent hundreds of millions of dollars in potentially illegal Canadian paper subsidies from damaging the American paper market. Sen. Klobuchar also signed the letter.

Recent reports indicate that the government of Nova Scotia plans to provide more than $200 million in subsidies - a potential violation of trade agreements between the U.S. and Canada - to a Canadian paper company that directly competes with a number of American paper companies, including operations in Duluth and Grand Rapids.

"With the U.S. paper industry already struggling amid the movement toward electronic communications and media, a flood of illegally subsidized paper into the U.S. market would deal an irreversible deathblow to many U.S. mills and the American workers that produce the same or competing products," Sen. Franken and ten of his colleagues wrote in a letter to U.S. Trade Representative Ron Kirk. "We need immediate assurances that Canada will withdraw these subsidies, and urge you in the strongest possible terms to use the tools at your disposal to quickly resolve this situation before lasting damage is done to the U.S. industry and the thousands of workers it employs."

In late October, after hearing from a number of Minnesotans that they were worried by reports that the government of Nova Scotia was planning to provide this financial assistance, Sen. Franken wrote a letter echoing their concerns to U.S. Trade Representative Kirk. Last week, he met with representatives from companies and labor unions that would be affected if illegally subsidized paper enters the U.S. market, who voiced similar concerns.

The full text of the letter sent by Sen. Franken - along with his colleagues Sens. Susan Collins (R-Maine), Amy Klobuchar (D-Minn.), Olympia Snowe (R-Maine), Carl Levin (D-Mich.), Debbie Stabenow (D-Mich.), Barbara Mikulski (D-Md.), Ben Cardin (D-Md.), Sherrod Brown (D-Ohio), and Rob Portman (R-Ohio) - is below.

Dear U.S. Trade Representative Kirk,

We are writing to express our serious concern regarding reports of huge subsidies being provided by the provincial government of Nova Scotia to the Port Hawkesbury Paper (PHP) mill in Nova Scotia, Canada. This mill was closed last year as part of the bankruptcy proceedings of its previous owner. However, it recently reopened due to what some news reports estimate to be more than $200 million in subsidies that were promised to the mill's buyer and new management.

We understand that information is still being collected on the nature of the subsidies, but press reports indicate that they include grants, loans, cash to purchase land, financial contributions to keep a supply chain intact, and reductions on utility rates and property taxes. Such subsidies would appear to represent violations of Canada's commitments under the Agreement on Subsidies and Countervailing Measures of the World Trade Organization (WTO) and U.S. countervailing duty law. We understand that your office raised this particular issue with Canada at the October 2012 WTO meeting in Geneva and that Canada is working to collect information in response your inquiry. We appreciate that you have taken this step and look forward to an update on the information Canada provides to you.

The supercalendered paper machine at the PHP is one of the largest in North America, with a capacity of 395,000 tons - equal to approximately 22 percent of the North American market. With the U.S. paper industry already struggling amid the movement toward electronic communications and media, a flood of illegally subsidized paper into the U.S. market would deal an irreversible deathblow to many U.S. mills and the American workers that produce the same or competing products. The U.S. industry is simply not in a financial position to weather a long drawn out battle over unfair Canadian trade practices, nor should they have to.

We need immediate assurances that Canada will withdraw these subsidies, and urge you in the strongest possible terms to use the tools at your disposal to quickly resolve this situation before lasting damage is done to the U.S. industry and the thousands of workers it employs. While a trade remedy action might bring eventual relief to the industry, the damage to U.S. mills will already have occurred. Thank you for your attention to this very serious matter, and please keep us informed of your efforts to resolve this issue expeditiously.

 

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