POINT TUPPER, N.S. (From news reports) -- A member of the management team at Port Hawkesbury Paper says it's a relief to have a costly cross-border trade battle officially behind the mill.
"We're elated," Bevan Lock, co-operations manager with Port Hawkesbury Paper, said in an interview Tuesday.
The mill received word from its legal counsel Friday that the U.S. Department of Commerce had approved a settlement agreement that had been reached with U.S. supercalendered paper manufacturer Verso earlier this year. Lock said the ruling came as a surprise, as it had been informed that the decision was likely to be delayed.
"The Department of Commerce went through the process in what they call a changed circumstance review, which is completely separate from any NAFTA review panel or World Trade Organization processes and proceedings which we had also been involved with the government of Canada," Lock said. "This revocation comes directly from Verso's non-interest letter."
While there is currently a great deal of uncertainty related to many cross-border trade matters generally, under the agreement Verso will not raise a similar complaint in the future. Verso produces 85 per cent of the supercalendered paper manufactured in the U.S.
"Really there's no other supercalendered producers left in the United States other than Verso, so we feel that there shouldn't be a lot of opportunity for future tariffs being levied against our products," he said. "There's other challenges in our industry, the use of paper overall is changing from printing and writing grades to more food packaging and things like that. That's what we have to focus on, is the future of this mill and the long term."
The mill's orders have been strong and it only recently completed a capital shutdown that allowed for upgrades to take place in some area. No market-related shutdowns are planned, Lock said.
Lock wouldn't say the amount of duties that have been collected but said it's his understanding the funds collected will be returned "in very short order."
Lock said the settlement frees the mill from having to mount a costly legal effort against what he said they saw as "a ridiculous exercise." More significantly, he said, it allows the business to refocus its energies on future operations.
Port Hawkesbury Paper has made efforts to become an efficient an operation as possible and to make the best use of its facilities, as well as diversify its business.
Verso Corp. made a filing regarding the agreement in the long-running dispute with the U.S. Security and Exchange Commission in March. It indicated that under the terms of the settlement, it would file with the U.S. Department of Commerce a request for a changed circumstances review of the countervailing duty order that was issued Dec. 10, 2015, which imposed the duties on supercalendered paper imported from Canada since Aug. 3 of that year.
Under the agreement, if the Department of Commerce granted the request, all of the duties collected since August 2015 would be refunded to Port Hawkesbury Paper and Irving. Verso would be paid a percentage of the refunded duties over time, with the total capped at $42 million.
Port Hawkesbury Paper was subject to a 20.18 per cent duty. Since the tariff was applied it has been held in trust pending the outcome of the dispute.
The American paper producer argued that the Canadian paper is unfairly subsidized. In the case of Port Hawkesbury Paper, at issue was the aid package it received in 2012 valued at about $124.5 million from the province to reopen the mill after a year-long sales process, as well as a special electricity rate that it receives.
