Stephen McNeil vows to fight tariff on Port Hawkesbury Paper

Nova Scotia Premier Stephen McNeil says the province will fight this week's ruling by the United States Department of Commerce that found Port Hawkesbury Paper's exports to the U.S. are being unfairly subsidized to the tune of 20.3 per cent.

The preliminary decision paves the way to levy duties on supercalendered paper, glossy paper used for magazines and catalogues.

"We're disappointed. Some of the assumptions they made have tilted their decision," McNeil said Wednesday. 

Three other Canadian companies, J.D. Irving Ltd. of Saint John, Resolute Forest Products of Quebec and Catalyst Paper Corporation of Quebec, are also affected. Resolute's subsidy rate was found to be 2.04 per cent and Catalyst's is the same as Irving at 11.19 per cent.

McNeil said U.S. Department of Commerce officials are expected to visit Nova Scotia "in-the-not-too-distant future" to allow the province and the mill to challenge information that went into the ruling.

Meanwhile, Port Hawkesbury Paper will be paying about $4 million in interim duties, development manager Marc Dube said.

'We find it a bit ironic'

"We will be paying the interim duty up until the middle of October when the Department of Commerce, based on the review of all their information, will make a final (ruling)," he said.

"We really believe, based on all the facts, the legal advice we have....we do not have subsidies and the money we will be paying in the interim will all come back to us."

The finding that the mill is being subsidized is largely based on electricity costs, he said.

"About 72 per cent of it is electricity and we firmly believe that the allegation on the electricity front here in Nova Scotia is not accurate and we have a good case that we will show next week to the Department of Commerce," Dube said. 

"We find it a bit ironic that they're talking about power rates in Nova Scotia, considering that we have the highest power rates in the country," McNeil said.

He also said Commerce officials mistakenly assumed that the Nova Scotia Utility and Review Board is an extension of the provincial government.

Businesses are nervous

The premier said the mill continues to be committed to its business plan and keeping the workforce employed.

"The dollar is working in our favour at this time," he added.

Dube said the mill will continue to operate as usual despite the large, extra tariff payment.

"We're working as we were in the past. It is business as usual here. Our order books are in good shape. Our employees are committed to the mill. We have a common goal and we're going to make sure the mill is here forever."

But Port Hawkesbury businesses are apprehensive about the ruling, Damian McInnis executive director of the Strait Area Chamber of Commerce admitted.

"The fact that they're putting the extra charge on our businesses in the region, it is kind of disheartening because you want to see things progress and a good relationship with our neighbours to the south," he said.

'Unwarranted complaint'

The U.S. investigation began in February after a complaint by an American industry group, the Coalition for Fair Paper Imports.

The complaint investigated by the Commerce Department was prompted by the Nova Scotia government's 2012 rescue package for the mill in Port Hawkesbury, formerly owned by NewPage Corporation. The $124-million package included a $40-million provincial government loan guarantee. 

The Utility and Review Board also approved a discount on electricity for the mill. 

International Trade Minister Ed Fast said Wednesday the federal government will also ask the Commerce Department to revisit its investigation findings.

"Canada is also concerned that the U.S. Department of Commerce is not conducting a thorough and complete review. We call on the U.S. Department of Commerce to review all of the facts in this matter," he said in a statement.

"We are disappointed that the U.S. Department of Commerce will impose tariffs on Canadian supercalendered paper due to an unwarranted complaint."