In September last year, Appleton Coated LLC, NewPage Corporation, and Sappi Fine Paper North America, supported by the United Steelworkers trade union, asked the Department of Commerce to impose duties to offset Chinese and Indonesian government subsidization. The paper products covered by the petitions include USD273m of coated paper used in high-quality writing, printing, and other graphic applications using sheet-fed presses.

The petitions estimated that total imports of covered coated paper jumped by 40% in the year to June 2009. During the same period, covered coated paper shipments by domestic manufacturers are estimated to have declined by approximately 38%. China and Indonesia together are believed to account for nearly 30% of the US market for the coated paper covered by the petitions in the first six months of this year, almost double the share they had at the same time last year.

The decision announced by the Department of Commerce supports the allegations in the petitions that imports from these two countries is being subsidized. Specifically, in the China investigation, the Department of Commerce found that the benefits of Chinese producers included low-interest lending, preferential income tax, tax credits for purchasing domestically-produced equipment, and import duty and value-added tax exemptions for imported capital.

In the Indonesia investigation, the Department of Commerce found that its paper companies are benefiting from timber provided from government-owned land at below-market prices, and a ban on log exports.

As a result of the duty determinations the Department of Commerce has now made, tariffs will be imposed on imports of coated paper to offset the unfair advantage provided by the Chinese and Indonesian subsidies. The Department of Commerce found that Chinese coated paper was subsidized by an average rate of around 8.4%. In Indonesia, it was found that producers received a subsidy margin of almost 17.5%.

The result of the Department's actions will be the immediate requirement that the importers of paper from the subject countries will have to post bond or cash deposits in an amount equal to the announced margins pending final resolution of the cases, which are expected in July this year.