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AF&PA and USW Affirm New Study on Chinese Subsidies to Paper Industry

Pittsburgh, Pennsylvania, and Washington, DC, USA, 30 June 2010 -- /PRNewswire/ -- A new study released today by the Economic Policy Institute (EPI) on government subsidies to China’s paper industry supports earlier studies by the American Forest & Paper Association (AF&PA), which found that the Chinese government employs direct and indirect subsidies to support state-owned enterprises, introduce new state-of-the-art technology, and build massive new production capacity. The study also strengthens the argument of the United Steelworkers (USW) union that U.S. policymakers must intervene now to preserve the domestic paper industry and hundreds of thousands of good-paying jobs.

The report, "No Paper Tiger: Subsidies to China's Paper Industry from 2002-2009," released by the Economic Policy Institute (EPI) documents USD 33 billion in government subsidies to the Chinese paper industry for pulp, coal, electricity, and recycled paper, enabling the Chinese paper industry to sell its products at artificially low prices.

"Today’s study reaches similar conclusions to previous studies by AF&PA and is further evidence that the Chinese paper industry has been able to grow to become the world’s largest paper and paperboard manufacturer and a leading exporter on the basis of substantial government subsidies," said Donna Harman, president and CEO of AF&PA. "The landmark AF&PA studies identified a range of central and provincial government policy directives and funding aimed at modernizing and advancing the industry’s production capacity and promoting exports. These policies include grants, low-interest loans, debt forgiveness, tax and duty concession for importing new technology, and value-added-tax export rebates.”

The USW contends that falsely low-priced paper dumped on the U.S. market makes American-manufactured paper appear uncompetitive, forcing plant closings, killing jobs and damaging communities.

"With so many Americans out of work, we cannot continue to hemorrhage paper manufacturing jobs because China violates international trade laws with massive subsidies to its industry," said Leo W. Gerard, USW International president.

China's government-controlled economy enables it to subsidize industries in ways never considered in market-controlled economies like the United States. In addition, government subsidization of industry violates international trade regulations.

"There are too many industries -- glass, paper, tire, tubular steel -- where China upsets the global market by grossly and systematically subsidizing its production," Gerard said.

"Free trade must be fair and rules-based or manufacturing in North America will further deteriorate, throwing millions more Americans out of work," said Gerard. "The only solution is for U.S. lawmakers to demand China obey international trade laws or to impose sanctions on Chinese imports that will have that effect."

The results of the study support the long-time contention of the USW and U.S. paper manufacturers that China improperly subsidizes its paper industry in ways that destroy American manufacturing and American jobs. The USW and three paper companies -- Appleton Coated LLC, NewPage Corporation, and Sappi Fine Paper North America -- filed suit seeking relief from the effects of the Chinese subsidies and have won every stage of that case.

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