Senators Collins Testifies at U.S. International Trade Commission Hearing on How Unfair Subsidies are Harming Maine Workers in the U.S. Paper Industry

Washington, D.C. — U.S. Senator Susan Collins testified at a U.S. International Trade Commission (ITC) hearing in Washington this morning on how unfair subsides are harming American workers in the U.S. paper industry.

Senator Collins’ testimony will assist the ITC in making a final determination as to whether the unfair Canadian subsidies, including those provided to the Port Hawkesbury Paper mill in Nova Scotia, have materially injured or threatened to injure Maine’s supercalendered paper industry.

In her testimony before the members of the Commission, Senator Collins stated that “Maine communities long dependent on paper mills are in real trouble. They need immediate relief from the unfair advantages afforded by illegal subsides, specifically those provided to Port Hawkesbury Paper in Nova Scotia Canada.”

Senator Collins first raised concern over the extensive subsides that the Port Hawkesbury mill received from Nova Scotia in a 2012 letter to the U.S. Trade Representative, which was signed by nine of her Senate colleagues. She has also raised this issue with Commerce Secretary Pritzker and Canadian officials.

Senator Collins continued, stating that, “Madison Paper has been forced to curtail production and lay-off workers three times in the first half of 2015.” In addition, the “outcome of this investigation may also affect the Maine workers at Verso Paper Corporation’s mill in Jay.”

Senator Collins concluded, stating that, “While I strongly support relief to these hardworking men and women and the companies that are being injured as a result of illegal government assistance, I want to note that it is my belief that the Department of Commerce should have reviewed all four Canadian producers of supercalendered paper to ensure a fair and accurate process…The Department of Commerce should do all that it can to rectify this very unfortunate situation, which will affect other Maine workers, through the expedited review process.”

See below for a full copy of Senator Collins’ testimony as prepared for delivery:

Chairman Broadbent and members of the Commission, I appreciate the opportunity to testify before you today on how unfair subsidies are harming American workers in the U.S. paper industry. I ask consent that my longer, written statement be included in the official record.

Maine communities long dependent on paper mills are in real trouble. They need immediate relief from the unfair advantages afforded by illegal subsidies, specifically those provided to Port Hawkesbury Paper in Nova Scotia, Canada.

Permit me to provide a little background. In 2011, the Port Hawkesbury mill filed for bankruptcy, halted operations, and laid off its employees. After millions of dollars were spent by the provincial government to keep the mill functioning in an idled state and to maintain its supply chain, the mill was sold in 2012 for just C$33 million. Then, a package of extensive subsidies from Nova Scotia worth approximately C$124.5 million was announced, which included numerous loans, grants, tax breaks, and reduced energy costs. This assistance served to tilt the market drastically in order to allow the once closed plant to restart, which would have been virtually impossible absent the enormous subsidies.

I first raised concern over these subsidies in a 2012 letter to the United States Trade Representative, which was cosigned by nine of my Senate colleagues. I have also raised this issue with Commerce Secretary Pritzker and Canadian officials.

Unfortunately, the concerns we raised back in 2012 have proven to be warranted. U.S. producers of supercalendered paper, including Madison Paper Industries in Maine, have been put at a significant competitive disadvantage since Port Hawkesbury reopened. Imports of supercalendered paper from Canada have skyrocketed. In July of 2014, the U.S. was importing nearly 24,000 tons, and just one year later that amount rose to more than 90,000 tons, causing prices and sales revenue for U.S. producers to plummet. In the last two years, the average price fell nearly 13 percent, from $830 per ton to $765 per ton. In USTR’s recent National Trade Estimates, the assistance provided by Nova Scotia has been cited as a concern in our trade relationship with Canada.

Madison Paper has been forced to curtail production and lay-off workers three times in the first half of 2015. The company’s President, Russ Drechsel, has stated that a primary reason for these layoffs is the unfair subsidies. The outcome of this investigation may also affect the Maine workers at Verso Paper Corporation’s mill in Jay—Verso is the second petitioner in this case.

While I strongly support relief to these hard-working American men and women and the companies that are being injured as a result of illegal government assistance, I want to note that it is my belief that the Department of Commerce should have reviewed all four Canadian producers of supercalendered paper to ensure a fair and accountable process. Reviewing all four producers, as I have urged, would ensure that relief provided through tariffs on imports, reflects the actual subsides, if any, received by each Canadian company. The Department of Commerce should do all that it can to rectify this very unfortunate situation, which will affect other Maine workers, through the expedited review process.

Chairman Broadbent and members of the Commission, thank you again for the opportunity to testify today.