Newsprint: Another blow for the Canadian forestry sector

MONTREAL, March 14, 2018 /CNW Telbec/ - After softwood lumber and supercalendered paper, this time it's newsprint and other printing paper that's being hit by American protectionism. These new tariffs will penalize not only Canadian companies, but also American consumers.

"The softwood lumber and supercalendered paper tariffs are already hurting the industry. The addition of antidumping duties on newsprint will be particularly detrimental to companies that produce all three," points out Alexandre Moreau, Public Policy Analyst at the MEI.

Indeed, after having announced preliminary countervailing duties in January ranging from 0.65% to 9.93%, Washington is now adding antidumping duties of 22.16% on the entire sector, with the exception of two producers.

The Commerce Department already imposed tariffs on Canadian softwood lumber starting a year ago, which has weakened the country's pulp and paper sector. As a result, American consumers pay a lot more for softwood lumber.

"It will be the same story with newsprint. Our companies, but also American consumers, will pay the price for these protectionist measures. South of the border, publishers and printers who use our paper will have to pay more, and may proceed with layoffs to offset these costs," explains Alexandre Moreau.

The Canadian forestry sector has been experiencing difficulties for several years, with steadily declining exports. The imposition of an additional tariff will only accentuate this trend.

"This is a good illustration of the logic of protectionism: A small group makes an additional net profit thanks to their lobbying efforts, but to the detriment of the vast majority, which loses big," adds Alexandre Moreau.

Note that in 2017, over 60% of Canadian exports in the pulp and paper sector were destined for the American market. In all, the sector adds $8.5 billion to the country's economic activity and 54,000 jobs, mostly located in Quebec and Ontario.

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The Montreal Economic Institute is an independent, non-partisan, not-for-profit research and educational organization. Through its studies and its conferences, the MEI stimulates debate on public policies in Quebec and across Canada by proposing wealth-creating reforms based on market mechanisms.

SOURCE Montreal Economic Institute