US imposes penalties on China paper

Updated: 2007-05-31 09:04

The Bush administration is imposing further trade sanctions against China, South Korea and Indonesia in a dispute involving glossy paper.

The US Commerce Department said in a statement that it has preliminarily determined that imports from the three countries of glossy paper -- used in art books, textbooks and high-end magazines -- were being sold in the United States at less than fair value.

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The preliminary penalty for the paper products from China ranged from 23.19 percent to 99.65 percent. The penalty imposed on imports of glossy paper from Indonesia was 10.85 percent while the penalty on South Korean imports ranged as high as 30.86 percent.

The penalties will be collected immediately although they will not become final until this fall after further investigations are conducted.

"This administration continues to aggressively and transparently enforce our trade laws to ensure a level playing field for American manufacturers, workers and farmers," said Commerce Secretary Carlos M. Gutierrez.

The decision came a week after US and Chinese officials met for a second round of high-level talks aimed at lowering trade tensions between the two nations.

The paper case was brought by NewPage Corp., a Dayton, Ohio-based paper company which contended that its coated paper was facing unfair competition because of the government subsidies and sale of imports at unfairly low prices.

The government trade sanctions have received the support of the United Steel Workers union, which represents about 90 percent of the workforce in the US coated paper industry. The glossy paper is produced at 22 paper mills in 13 states.

These penalties will be imposed on top of economic sanctions levied in March after the US administration alleged that paper companies from those three countries were receiving improper government subsidies that allowed them to undercut the price of American producers.

The March decision reversed 23 years of US trade policy by treating China, which is classified as a nonmarket economy, in the same way other US trading partners are treated in disputes involving government subsidies.

Chinese officials denounced the decision in the government subsidies case saying that it went against the consensus of both countries to resolve disputes through dialogue rather than imposing trade sanctions.

The second round of the Strategic Economic Dialogue, which was launched by Treasury Secretary Henry Paulson in December, was held in Washington last week.

Paulson and Chinese Vice Premier Wu Yi announced a series of agreements including the boosting of airline flights between the two nations. But they failed to make progress in one of the biggest rade irritants, the value of China's currency. The Bush administration urged China to quicken the pace of yuan revaluation, while Beijing emphasized that yuan should be kept "basically stable at a reasonable, balanced level."

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