WTO Panel Says US Erred in 2015 CV Duty Case on Canadian Paper

The countervailing duties levied by the U.S. on two Canadian companies that make supercalendered paper relied on assumptions that were not justified, a World Trade Organization panel ruled July 5.

The U.S. had levied 20.18% countervailing duties on Port Hawkesbury supercalendered paper, arguing that the company received subsidized electricity and that the government of Nova Scotia provided for below-market stumpage and biomass. It also levied a 17.87% duty on Resolute Canada as part of the same case in 2015 (see 1512090012). "The Panel acknowledges that the information on pricing [of biomass] was redacted by the Government of Nova Scotia. However, even if the pricing information was not available to the applicant, the initiation could not be justified without sufficient evidence of the existence of a benefit," the verdict said.

Verso Corporation, the original petitioner, has said it no longer wants the countervailing duty collected, and the Commerce Department is considering ending the duties, due to changed circumstances. Verso filed for bankruptcy protection after the duties were imposed, but exited with less debt six months later. The company did not respond to questions from International Trade Today about the case. Supercalendered paper is used to print magazines, retail inserts, catalogs, corporate brochures and coupons.

With regard to Resolute, the Commerce Department decided it could draw conclusions because although Resolute said it was not aware of receiving any subsidies, it found that a Resolute subsidiary had gotten government help with converting its electricity fuel source from oil to natural gas, and had received training funding. But those were not the issues originally cited in the investigation, and the panel said that just because it discovered those circumstances late in the process, that was not justification for the U.S. to infer how much these subsidies might have been worth -- particularly since they were not specific to supercalendered paper exports. The U.S. has not yet said whether it will appeal the WTO dispute panel's decision.