US papermakers in war of words with EU over tariffs

Date: 03/04/1997

By Chris Johnstone

SIMMERING animosity between European and US papermakers has flared up, with each side firing off venomous attacks against the other on their best quality A4.

US companies launched the assault by accusing European firms, especially in Finland and Austria, of dumping quality paper on their markets while American exports were shut out by high tariffs. Finnish exports of quality paper were worth more than 600 million ecu in 1995, complained the American Forest and Paper Association.

The association has repeated its call for the US administration to put pressure on the Union for the total phasing out of paper tariffs well ahead of the current 2004 deadline agreed at international trade talks.

The European side, represented by the Confederation of European Paper Industries, has warned Trade Commissioner Sir Leon Brittan that fast-track tariff reductions are out of the question and have objected to US producers picking on one member state.

The confederation maintains that US producers' anger has been prompted by the fact that they now face higher tariffs in Austria, Finland and Sweden following the trio's accession to the Union. The EU currently imposes a 7&percent; tariff on North American imports of high-quality paper for magazines and writing paper.

But the war of words has left North American governments little moved. US trade officials say they are following the thorny dossier, but have not received any formal complaint and are not examining any dumping duties against European producers. They do, however, concede that the question of EU tariffs may have been raised, but not pressed, as a side issue at recent international trade talks on the liberalisation of the global information technology market.

Even worse for the US paper firms, the Canadian government - formerly in the vanguard of demands for European tariff changes - now appears to be happy with its lot.

Canadian companies are selling as much newsprint as they can produce in the EU. Newsprint sales topped 140,000 tonnes in the first two months of 1997, leaving Canada with around 460,000 tonnes to sell by the end of the year before it exceeds its duty-free quota and faces possible import duties.

“There is such heavy demand that our companies are almost running at full capacity,” said an official. He added that even if the quotas were exceeded, the possibility remained that Union governments could ask for them to be extended so that paper prices would not soar.

Tariffs of around 5&percent; can, in theory, be imposed by the EU on newsprint once import quotas have been filled.

The issue of paper quotas and tariffs is a sensitive one for European papermakers. They are still being probed by European Commission competition officials suspicious that cartel activity could explain a 20&percent; surge in prices between 1993 and 1994. Keen to profit from their discomfort, US producers say there would be no chance of a cartel if trade was opened up.