Port Hawkesbury Paper, government to file NAFTA appeal in tariff dispute

Port Hawkesbury Paperhas filed a North American Free Trade Agreement appeal in light of the U.S. government'sdecision to uphold tariffs on themill's exports.

The U.S. InternationalTrade Commission released the decision papers on Wednesday, upholding aruling that the U.S.paper industry was "materially injured" by imports of supercalendered paper from three mills in Canadaowned by Port Hawkesbury Paper, Irving Pulp and Paper in New Brunswick and Resolute Forest Products in Quebec.

The federal government also announced it has concurrentlyfiled an appeal with NAFTA on behalf of thoseprovincestoday.

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"We're disappointed and frustrated that the U.S. government continues to impose an unfair duty on Port Hawkesbury Paper," said Nova Scotia Energy Minister Michel Samson.

The U.S. Commerce department imposed duties earlier this year. It said Port Hawkesbury Paper, which is owned by Stern Partners, was saving $24 million a year on maintaining the power grid compared to NewPage, the mill's previous owner.

So far, the province has spent $2.3 million defendingthe company's fight against the duties, which include a 20.18 per cent tariff on all paper shipped from the mill to the United States.

But Samson says that fight has gone as far as it can go within the U.S. government.

"We believe we've provided them with the evidence necessary to show they [Port Hawkesbury Paper]are not receiving a subsidized rate for their power," he said.

"There continues to be a misunderstanding as to the independence of the Utility and Review Board when it comes to setting power rates in the province and we will be joining Port Hawkesbury Paper and the Government of Canada in launching a NAFTA appeal process of this decision."

Appealcould take up to threeyears

Samson says the appeal could take two to three years at more cost to the taxpayer.

"It's a lengthy process," he said,adding the appeal was important "because[the mill is] an important employer for our province, an important exporter for our province and the fact is this is an unfair duty they are putting against a Nova Scotia company."

The mill will continue production with the added 20 per cent tariff, but Samson says risk accumulates if the value of the Canadian dollar increases.

"There's no question that the dollar right now is favourable for the company which is allowing them to continue to operate and to be able to sustain this significant tariff," he said.

Marc Dube, the mill's development manager, says the company has been working on a new cost structure to allow the mill to keep running if the dollar's value changes during the appeal process.

"Finding ways to do things more cost effectively, and lowering our overall cost per time so we can be more competitive. We're also shipping more paper into Canadian and abroad," Dube told CBC News.

"But we're certainly looking outside the U.S. for market."

Dube said more than one thousandpeople in the Strait area of Cape Bretonare employed by Port Hawkesbury Paper.

With reporting from Paul Withers