Every business has to consider what it costs to produce a good or a service. When government steps in and determines winners and losers, though, we all lose. This has been the case over the past several months for the newspaper industry.
The Independent’s single largest expense is printing. When the cost of newsprint increases, we must decide how to offset that cost—either by raising prices to our advertisers or by making cuts. For small newspapers—many of which operate on razor-thin margins—an increase in its printing costs can spell the end. An arbitrary government-based increase in costs will impact every newspaper in the country and could spell the end for many smaller newspapers.
All of this comes about through the complaint of one plant in Washington—the North Pacific Paper Company, or NORPAC. The company, which is owned by a hedge fund, filed a complaint with the U.S. Commerce Department last year saying that Canadian paper producers have an unfair advantage over American competitors.
The Commerce Department, in a ruling last month, tentatively agreed to raising tariffs on newsprint as much as 8 percent depending on the type of paper and the plant’s location. In March, the Commerce Department will make another ruling on an anti-dumping levy, which would affect the price of transporting paper from mills to users.
Some industry analysts believe that the tariff and the anti-dumping levy could increase the price of newsprint more than 15 percent.
Canadian paper mills produce about 75 percent of the newsprint in the U.S. Industry leaders say this is due more to the fact that there are only five mills in the U.S. that make newsprint. In addition, Canadian producers are able to keep costs down in large part because they produce newsprint in large scales. American buyers of newsprint will not be able to switch their buying to American plants because those five mills cannot produce the amount of newsprint needed.
NORPAC insists it is looking out for the workers in its plant, which number about 250. If the tariff and levies become permanent, that could have the impact of thousands in the newspaper industry losing their jobs. To a community newspaper, this is the photographer who takes pictures at a high school football game, the reporter who spends hours at the school board meeting, the editor who takes time to get it all together, the advertising manager who helps businesses get their message out and the delivery driver who gets the paper to your house.
The decision by the Commerce Department is arbitrary because it is unnecessary. And while the tariff has already been implemented, it is still not permanent. Both the tariff and the anti-dumping levy will be investigated by the International Trade Commission, an independent federal agency that will determine whether NORPAC can prove there is unfair trade.
The evidence suggests there isn’t unfair trade and that tariffs on newsprint will do more harm than good. Government should not be in the business of choosing winners and losers, and New Mexico’s congressional delegation should be working to assure these tariffs don’t become permanent.