J.D. Irving Ltd. seeks prompt review of U.S. subsidy ruling

J.D. Irving Ltd. says it will ask the U.S. Department of Commerce for a prompt review of a preliminary ruling that could lead to countervailing duties being slapped on Irving paper imports.

The decision, released on Tuesday, assigned a "subsidy rate" of 11.19 per cent to a specialty paper product produced at the Irving paper mill in Saint John, even though the investigation didn't examine Irving's business and it had no opportunity to rebut.

"We are confident that once this thorough review is complete no [countervailing duty] rate will be imposed on our U.S. imports," Irving Paper vice-president Mark Mosher said in a statement on Wednesday.

"We continue to work with the provincial and the federal governments and are focused on an expedited review of our case" by the Commerce Department, the statement said.

The department opted to investigate only the two largest Canadian companies, Port Hawkesbury Paper of Nova Scotia and Resolute Forest Products of Quebec, that export the specialty supercalendered paper to the U.S., due to the large volume of evidence involved — some 17,000 pages.

Even so, J.D. Irving Ltd. is subject to the ruling, which uses an average of the the Port Hawkesbury and Resolute subsidy rates to determine the Irving rate.

Final decision this fall

That 11.19 per cent rate would likely be the amount of duty that U.S. buyers of Irving paper would be forced to pay.

There won't be any duties imposed until Nov. 30, and only if the department and the International Trade Commission both uphold their preliminary findings in the case.

But the department is asking U.S. Customs to start collecting cash deposits at the border now, in advance of the final ruling this fall.

The U.S. investigation was prompted by the 2012 Nova Scotia government bailout of the Port Hawkesbury paper mill. U.S. competitors had argued that put them at a competitive disadvantage.

The initial review looked at four companies: Irving, Port Hawkesbury, Resolute, and Catalyst Paper of British Columbia.

Irving's exclusion from the investigation, and its resulting inability to argue its case in Washington, was the subject of a flurry of lobbying in the weeks leading up to Tuesday's ruling.

Canadian ambassador Gary Doer called U.S. officials earlier this month to argue Irving and Catalyst should be given a chance to argue their case.

Maine Governor Paul LePage wrote a letter pointing out Irving didn't benefit from the Nova Scotia bailout and arguing any duties could affect the 1,200 Irving jobs in his state.

And J.D. Irving Ltd. itself signed a certification renouncing any subsidies being investigated, effectively guaranteeing it would never benefit from them.

But the Commerce Department stood by its decision, saying U.S. law allows it to apply an "all-others" subsidy rate to companies that are not investigated.