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US moves pull down paper mill shares

By Ou Lu (China Daily)
Updated: 2009-09-25 08:29

Share prices of Chinese papermakers slid sharply yesterday after three US paper companies and the United Steelworkers Union (USW) revived a trade complaint against imports of coated paper from China and Indonesia.

Experts warn of a growing tendency of protectionism against Chinese imports in the US, despite a recent victory of a Hebei tire company in its appeal against US Commerce Department's decisions.

Appleton Coated LLC, NewPage Corp and Sappi Fine Paper North America, which together employ about 6,000 union workers at paper mills in nine states, and the United Steelworkers said $317 million in imports of the paper from China and Indonesia should face anti-dumping and countervailing duties that may total more than 100 percent.

The action came just a day after Chinese President Hu Jintao complained to US President Barack Obama about the tire tariff decision in a meeting on the sidelines of a United Nations general assembly meeting in New York.

Nine Dragons Paper (Holdings) Ltd, China's biggest maker of containerboard paper for packaging, fell 3.44 percent to HK$9.81 in Hong Kong trading yesterday, while Shandong Sun Paper Industry Joint Stock Co Ltd witnessed a drop of 2.21 percent to close at 15.46 yuan on the Shenzhen Stock Exchange.

The Obama administration's decision to impose punitive tariffs on Chinese tire imports had set a "dangerous precedent" as other industries would follow to ask for protection, said He Weiwen, council member for the China Society for American Economy Studies.

The US petitioners estimate imports of coated paper, which is used in high-quality writing and printing, increased 40 percent in the first six months of this year, compared with the same period last year. Imports from China and Indonesia now account for nearly 30 percent of the US market, they said. However, according to statistics from China Customs, China's coated paper exports to the US only accounts for less than 3 percent of US' total consumption.

"The USW is using rising unemployment rate in some industries to find fault with Chinese imports, the nation should start its own investigation on whether its exports have affected US unemployment rate," He said.

Related readings:  MOC: Anti-dumping probes 'based on facts'  China starts dumping probe on US goods  Chinese tire makers react to U.S. tariff  China requires talks on US tire tariff

"APP (China) will work with the Chinese government and industry associations to deal with the harm that possible anti-dumping and countervailing duties would bring to the Chinese paper industry and the company would resort to legal means to protect its rights," said Zheng Rui, a senior official with the Chinese branch of Asia Pulp & Paper Co Ltd.

Unlike the steelworkers' petition in the tire case, this complaint will not land on Obama's desk. Instead, the US International Trade Commission, a federal agency, will have the final word on whether anti-dumping and anti-subsidy duties will be imposed after an investigation by the Commerce Department. The case against China and Indonesia are expected to take about more than a year to complete, said He.

"If the US is to adopt similar actions against Chinese imports in the future, I think that the US might find themselves on the receiving end of strong retaliatory actions from China and I believe this is not something which the US would like to see," said Hubert Tse, an Australian lawyer based in Shanghai.

Hebei Starbright Tire Co, one of the Chinese producers affected by the tariff decision, challenged the Commerce Department at the US Court of International Trade, China's Ministry of Commerce said in a statement on its website on Wednesday. The court ruled in favor of the Chinese tire company, saying that US Commerce Department's imposition of dumping and anti-subsidy tariffs on Chinese off- road tires may involve "double-counting" of tax rates.