ITC hears evidence about newsprint tariffs

Aug 14, 2018

By Tonda F. Rush
Public Policy Director | NNA
WASHINGTON—The battle over newsprint tariffs heated up an already-warm July in Washington, as the International Trade Commission took evidence from witnesses in its investigation into alleged unfair trade practices by Canadian paper producers.
National Newspaper Association Vice President Andrew S. Johnson, publisher of the Dodge County Pionier in Mayville, WI, testified with seven other witnesses against the tariffs.
The hearing came near the end of an investigation that began last August when North Pacific Paper Company in Longview, WA, brought complaints to the U.S. Department of Commerce and the ITC that Canadian producers had received unfair subsidies from their governments and were selling uncoated groundwood paper in the U.S. below fair market value. Although uncoated groundwood paper includes grades other than newsprint—such as pulp book and directory papers—newsprint is by far the largest category.
Final determination by ITC is set for Aug. 28, but industry experts say the commission’s recommendation will be known in mid-August. However, following the July 17 hearing, the commission issued an order requesting new information from the paper industry, possibly reflecting a change in approach by analysts that could delay the determination slightly.
The investigation runs parallel to the Commerce inquiry, which analyzes the marketplace and sets tariff levels. ITC’s role is solely to determine whether trade practices have created injury or are likely to create injury to U.S. producers.
Although there are five U.S. newsprint mills, only NORPAC proposed tariffs. The leading U.S. producer, Resolute FP US, opposes the tariffs, as do Kruger Inc., Catalyst Paper Co., Tembec Inc. and the American Forest and Paper Association. Most producers say the shrinkage they have experienced in the past decade has come from declining demand by U.S. newspapers and not unfair trade practices.
Union representatives have landed on both sides of the issue, with a papermakers group appearing with NORPAC at the hearing, and both Teamsters and Communications Workers of America making statements in opposition to the tariffs.
The newspaper industry was represented by Johnson; Paul Tash, publisher of the Tampa Bay (FL) Times and Paul Boyle, senior vice president of the News Media Alliance. Their testimony was joined by statements from Gannett Supply Corp., McLean, VA; Quad Graphics, Sussex, WI; Resolute; Kruger; Catalyst and 19 members of Congress who appeared to argue against the tariffs.
Johnson testified that the tariffs had hurt community newspapers and criticized public commentary suggesting that newspapers could survive the tariffs simply by raising their issue price a few cents.
“Absorbing major cost increases is not as simple as marking up the price of a can of soup. We print our newspaper for our readers, but readers do not pay the primary cost of producing a newspaper. Our operating cash comes from local business advertisers. At the Pionier, for example, 75 percent of our revenue is from advertising and 21 percent is from selling subscriptions. … A year ago, I raised the Pionier’s subscription rate from $39- $42 and I held my breath. It was the first time I had raised my rates in 10 years. I have lost some subscribers. … I cannot pass along another increase now without damaging my business,” Johnson said.
He noted that advertisers were equally unable to absorb the increase.
“First, they may be dealing with their own rising newsprint costs if they print their own ads for insertion into my paper. Second, I face advertising competition from Facebook and Google. Finally, my business customers also face pressure because they have new competition from Amazon.”
Johnson said the tariff damage would be felt most heavily by the community he serves.
“It is no good to say the internet will take over,” Johnson told the commission. “The Internet has no reporters in Mayville, and I cannot do more digital publishing without revenue from my printed newspaper,” he said.
Tash said his company had already had to lay off 50 employees, some of them veteran reporters and editors. He said the Times had won 12 Pulitzer Prizes in its history, but is unable to cover as much of its community as it once did. He, too, said his newspaper could raise neither subscription prices nor advertising rates without further harming the business.
Members of Congress, confined to five-minute statements, were often impassioned about their concern for local newspapers. All said that although they support trade sanctions in many cases, the newsprint case was unique both because of its impact upon newspapers and because sanctions would be unlikely to create more domestic newsprint production when demand continues to fall.
Sen. Susan Collins, R-ME, said: “This century has already seen challenges in the printed newspaper industry, but there is still a strong demand for printed papers across the country, particularly in the areas where access to broadband internet is limited. For many newspapers, it is the printed version that provides essential revenue that supports much of the content that is developed and is distributed in print and on digital platforms. This case is speeding the decline in an industry that plays an important role in our society and at the same time endangering more U.S. jobs while not creating them in the domestic uncoated ground wood paper industry.”
Sen. Johnny Isakson, R-GA, said: “In the olden days, as we used to say when I was a little kid, the newspaper printed the political news and the business news in the community. I went to the newspaper to get that news. The reporters who wrote that news and wrote those articles that I read had attended the zoning meetings the night before or the medium they were writing about the night before; they had the night to think about the article, they had written it overnight and they submitted it in the morning. They had 12 to 24 hours of time to sit before it was reported. A lot of different things happen when you have 12-24 hours to think about something and of all the news mediums there are, and I respect them all; there’s none that delivers a more quality insight into the issue of the day than the newspaper article that was written yesterday on the hearing that was reported on from yesterday. If we ever lose that, we will be dealing with the 24/7 news cycle as the only source of un-thought-about but delivered news to the public officials and the people of our state.”
Sen. Roger Wicker, R-MS, whose state is home to a Resolute mill in Grenada, said: “My greatest concern is how these tariffs will harm a major newsprint producer in my state as well as the many small and rural newspapers who operate with small budgets and tight margins.”
Sen Angus King, I-ME, echoed a historic comment by Thomas Jefferson: “Paris, Jan. 16, 1787. Thomas Jefferson to Edward Carrington, the basis of our government’s being the opinion of the people, the very first object should be to keep that right. And were it left to me to decide whether we should have a government without newspapers or newspapers without a government, I should not hesitate a moment to prefer the latter.”
Rep. Jim Cooper, D-TN, said: “I would suggest to you that your first rule should be the physician’s rule. Do no harm. By leaving things alone, the newspapers will have a tough enough time surviving. Do not add to their misery and pain.”
Rep David McKinley, R-WV, said: “Small world states that depend on the papers are particularly hard-hit, like my home state in West Virginia. The West Central Publishing Co., one that only has a 2,000 circulation, is going to lose $18,600. How are they going to make that money up? Well, what about the Exponent Telegram in Clarksburg, WV, that’s going to be hit by $180,000? They’re already suggesting it’s a possibility there could be four job losses as a result of that, in just one small community.”
Rep. John Moolenaar, R-MI, took up the cause for the student press in his state: “In Owosso, the Argus Press also prints the newspapers of 70 high schools. If these tariffs go into effect, the cost will be too great for some high school papers to even continue. Students will lose chances to learn about writing, journalism and the First Amendment. We should be creating more opportunities for these important civic lessons, and all we have to do is end this unnecessary and burdensome government regulation.”
Rep. David Trott, R-MI, who said his family had an interest in some Michigan newspapers, said: “Newspapers that are facing these challenges have in many instances been an integral part of their communities for decades. The tax on newsprint is not good for the papers, not good for the manufacturers, not good for the small towns and cities where they provide their newspapers. This means that jobs will be lost, the local football games won’t be covered, and the decisions by the local school board will be less transparent. For our papers, I’m not involved in the operations, but I suspect several of our long-term employees will either lose their jobs or be forced into part-time work.”