Last weeks’ imposition of anti-dumping and anti-subsidy duties on imports of Chinese coated fine paper (CFP) into the EU has, though it came as no surprise, provoked a mixed response from the industry.

Admittedly, the two camps comprise almost exclusively paper manufacturers on the one side and printers on the other. Still, whether you believe the European Commission’s decision to have been the fair conclusion of an independent investigation into Chinese trade practices or grossly unjust protectionism is now a moot point. For the next five years – barring a successful appeal – imports of CFP from China will be subject to anti-dumping duties of up to 35.1% and anti-subsidy duties of up to 12%.

From a technical standpoint, the ruling applies to sheets and rolls that can be used in sheetfed presses, but excludes rolls for use in web presses, as the Commission concluded CFP reels used in web and sheetfed printing were distinct, non-interchangeable products; besides which no CFP web reels were imported from China during the 15-month investigation.

Unknown implications
Although not a novelty from an anti-dumping standpoint, this is the first time that anti-subsidy duties have been imposed in the EU against Chinese imports. So what are the implications of this for European trade? Whether the move could snowball and sour Chinese and western trading partnerships is yet to be seen, but taking into account how the provisional anti-dumping duty of up to 39.1% has affected the print market is a useful indicator.

According to Frank Leerkotte, managing director of the confederation of European fine paper manufacturers Cepifine, volumes of Chinese CFP during the six months preceeding last week’s decision, during which time provisional duties were in force, have "decreased substantially". "There was speculation that after the preliminary measures prices would be affected," he says. "That has not been the case."

Leerkotte backs the Commission’s decision, which has vindicated Cepifine’s accusation that Chinese manufacturers have been dumping CFP in Europe. "We just wanted equal rules for everyone," he adds.

However, Chinese paper manufacturers still contest the verdict. Indonesia-headquartered Asia Pulp and Paper (APP), whose Chinese subsidiaries now face combined duties of up to 20% on their CFP imports, says it is considering "all legal options available". Stuart Andrews, APP’s corporate affairs manager for Europe, now expects to see a "higher than global market price" for CFP in Europe. "The price of coated, like other types of paper, is closely related to global markets for pulp, fuel and other raw materials," he says. "The EU has intervened in market competition and this will harm printers in the region." Andrews adds that when its European customers calculate the impact of these new duties, "APP is not expecting many sales".

Price hikes
Andrew Brown, public affairs adviser at the BPIF, says although Chinese imported paper represents only 5% of the market, the successive rises in the cost of paper mean BPIF member companies are increasingly looking to source at least some of their paper supplies from China. "European manufacturers will put up their prices anyway," he says. "But these tariffs diminish the impact of a source of competition that might have caused them to at least think about holding down these increases to some degree in order to remain competitive."

The BPIF is concerned the duties will have several negative impacts on the UK print market. Brown says prices may be "driven artificially higher", which would further exacerbate cost increases faced by print firms. "Printers are already facing severe competition from low-cost producers in the Far East and from electronic media alternatives, and so find it extremely difficult to pass on these increases without losing volume of orders." He adds that the duty means European paper mills will lack incentives to modernise their production facilities, resulting in ageing capacity operating at higher costs and with a higher carbon footprint.

A further concern is that there is no longer a level playing field between imports of "white" Chinese CFP, which carry a tariff, and imports of products printed in China, which do not. Brown says: "Given that publishers generally buy the paper used to manufacture their printed products, this creates a powerful additional incentive for them to source their printing in China rather than just their paper." In sectors that are already facing severe competition from the Far East, such as books, Brown says the last thing printers need is further encouragement for European publishers to source print there. "This is typical of the sort of unintended consequences that so often result from market distortion created by protectionist measures."

Barry Pearson, managing director of commercial printer Expert Print, says he expects further increases in paper prices from the continental producers following the dumping tax, as the demand for European paper will also increase. "That said, paper prices have seemed to settle a little. Let’s hope they stay that way."

Prior to the duties, Pearson was paying around £820 a tonne across the board, while coated paper from China was £500 per tonne. "Obviously this tax means the saving is negligible, and therefore we are all obliged to stay with the normal supplies that seem now to be discontinuing their Chinese stocks."

If any outcome is certain, it’s that the Commission’s move will put additional strain on the sector when it least needs it. For any UK printer that has attempted to reduce costs by buying paper from China, the impact of the anti-dumping tax could be quite substantial and the extra squeeze on cashflow could prove terminal should the upward price trend from European mills continue unabated.

30-second briefing
• Imports of Chinese CFP will be hit with anti-dumping duties of up to 35.1% and anti-subsidy duties of up to 12% for the next five years, barring a successful appeal
• The ruling applies to sheets and rolls that can be used in sheetfed presses, but excludes rolls for use in web presses
• The EU Commission says its 15-month investigation brought to light that the Chinese government was significantly subsidising its coated paper industry by giving cheap loans, allocating land below market value, and granting various tax incentives
• Companies affected include Asia Pulp and Paper, whose Chinese subsidiaries now face combined duties of up to 20% on their CFP imports
• The BPIF is concerned that the duties will have several negative impacts on the UK print market, and that prices may be "driven artificially higher"