WorldCity, U.S takes precedent-setting action against China in coated-paper case | Connecting Local Business Leaders To The Global Economy

U.S takes precedent-setting action against China in coated-paper case

April 2nd, 2007

The Bush Administration made a precedent-setting call for sanctions against coated paper imported from China, the first time the United States has not treated the Asian nation as a special developing market economy.

Reaction to the precedent-setting ruling was quick. China appealed the Department of Commerce ruling, the dollar fell against the yen and Euro, and magazine publishers and other users of coated papers began calculating the effect on their costs, should the ruling stand.

The sanctions were not applied against South Korea, which at the time was engaged in last-minute attempts to construct a free trade agreement and which is the leading importer of similar categories of coated or glossy paper, or Canada, which is the top provider for all coated paper sent to the United States.

What is clear from WorldCity analysis of Census Department statistics is that the value of coated paper entering the United States from China, South Korea, Finland, Germany, Spain, Canada, Japan and elsewhere is increasing, putting pressure on U.S. paper mills to compete.

Since 1997, the value of all coated papers has more than doubled. In the same time frame, the value of imports of all coated paper from China is up more than 76,000 percent.

Because of jumps like that, China is, of course, special. As so often happens, once China enters a market, it forces prices down so rapidly that it can send tidal waves through existing markets as it quickly moves toward domination. While that can be beneficial to a wide range of businesses and consumers, it often leads to calls for protection from unfair trade practices from those adversely affected.

The quick rise in prominence has happened in the apparel industry, electronics and is now happening in the furniture industry. It is happening in the coated paper industry as well, with significant increases in recent years.

In one of the three categories of paper in question, the United States imported $218 million from South Korea in 2006, $98 million from Germany and $97 million from China. But China’s year-over-year growth rate was 178 percent, compared to 11 percent for South Korea and 66 percent for Germany.

In a second category, China was not even a Top 10 provider in 2004, became the No. 1 provider in 2005, and in 2006 registered more than twice the total of South Korea. It went from having less than 1 percent of the market to more than 58 percent.

	Country	2006	1997	Dollar Change	% Change
2006	World Total	$3,432,238,267	$1,669,730,392	$1,762,507,875	105.56%
1	Canada	$1,118,700,382	$891,076,981	$227,623,401	25.54%
2	Finland	$677,733,303	$266,751,974	$410,981,329	154.07%
3	South Korea	$378,753,743	$38,299,145	$340,454,598	888.94%
4	China	$307,326,890	$403,190	$306,923,700	76123.84%
5	Germany	$254,327,604	$105,365,510	$148,962,094	141.38%
6	Japan	$113,303,291	$41,653,058	$71,650,233	172.02%
7	Italy	$103,142,855	$48,430,937	$54,711,918	112.97%
8	France	$95,848,918	$53,955,386	$41,893,532	77.64%
9	Austria	$83,425,009	$42,595,534	$40,829,475	95.85%
10	Sweden	$82,591,664	$29,782,222	$52,809,442	177.32%
11	Indonesia	$49,580,805	$805,071	$48,775,734	6058.56%
12	Spain	$44,329,624	$28,483,831	$15,845,793	55.63%
13	Switzerland	$31,004,180	$17,859,997	$13,144,183	73.60%
14	Netherlands	$27,926,415	$14,062,087	$13,864,328	98.59%
15	Mexico	$17,872,913	$8,998,828	$8,874,085	98.61%
16	United Kingdom	$17,356,250	$44,805,781	($27,449,531)	-61.26%