Witless Protectionism Now Puts a Bull's Eye on Your Local Newspaper
An anti-dumping petition launched by a hedge fund has the potential to drive up the cost of newspapers and even drive some small-town newspapers out of business, leaving their subscribers with less access to information about what is happening in their own community. Isn’t it time to take a good look at whether anti-dumping measures make any sense at all for consumers? Especially when almost all products require inputs from beyond any one nation’s borders
The anti-dumping petition in question was brought by the North Pacific Paper Company, which was recently acquired by a New York-based hedge fund. The charge is that Canadian governments are subsidizing the cost of groundwood paper, used in the production of newspapers, giving Canadian producers an unfair advantage that allows them to dump newsprint in the United States at prices below the cost of production. The Commerce Department is expected to make a preliminary determination next week. An anti-dumping decision could lead to duties of as much as 50 percent – a cost that would ultimately be born by readers.
Let’s take a close look at what is actually being alleged here: A Canadian government is being accused of making newsprint cheaper for users, thereby helping small newspapers across the United States stay alive and continue to provide a source of information for readers about their local communities. What a dastardly scheme!
If selling newsprint at below-market prices is to be prohibited, does that mean Black Friday or after-Christmas sales should also be banned? Anyone who claims to be against dumping should also refuse to buy their jackets or pants (or anything else) on sale. If you aren’t prepared to pay a standard retail price, why should anyone else?
For that matter, if under-pricing a competitor is really that bad, should we all stop shopping at Walmart or online? We’re all looking for bargains; why try to prevent anyone from offering them? If Canadians are prepared to subsidize the cost of newsprint for U.S. newspapers, doesn’t it make more sense just to take a cheap deal and run? (Full disclosure: The writer of this article is Canadian.)
Who are the ultimate beneficiaries of the alleged Canadian cut-rate pricing on newsprint? About 175,000 Americans whose jobs in the newspaper industry may be at stake, the 1100 newspapers that sent a joint letter to Commerce Secretary Wilbur Ross arguing that duties are not warranted, and most importantly, the readers who depend on local newspapers for local information.
Then why is the Commerce Department even considering imposing sanctions against the import? Because of a complaint initiated by one hedge fund trying to use trade laws to enhance the short-term value of one paper mill. In fact, the anti-dumping petition is opposed by other U.S. producers of newsprint and the American Forest and Paper Association, which represents the broader U.S. paper industry.
The ironic thing is that local newspapers and jobs in the newspaper industry are not being threatened by trade actions, but by a decade-long shift toward digital media, evidenced by a 30 percent decline in print newspaper subscriptions over the past decade, and disruption in the retail sector. Even more ironic: If newspapers are forced by higher duties or penalties to refrain from buying cheaper newsprint paper from Canada, that would not increase the number of domestic jobs. It would only eliminate many, by making newspapers across the United States less competitive.
But the larger issue isn’t the impact a protectionist decision would have on people who own newspapers or work for them. The bigger issue is the potential impact on the people who buy and read them. Producers are meant to serve their customers, not the other way around. Consumers are not a resource to be hoarded by existing businesses, and fenced off from less costly ways of meeting their needs.
Is the local newspaper you read to keep up with what is going on in your community really a foreign good? Or is it a domestic good – indeed a local one – that happens to contain a vital input from outside the country?
An anti-dumping decision against imported newsprint paper would cost more jobs than it would save. Most importantly, it would levy a heavy cost on the consumers who might no longer have access to a local newspaper at a reasonable price.