Major exporter Asia Pulp & Paper loses a round in the latest trade battle.

HONG KONG--Recessions can be a boom time for trade lawyers.

Economic downturns typically spark a spate of allegations by U.S. companies and unions that foreign exporters engage in pricing and business practices that violate global trade regulations.

Because for these so-called anti-dumping and countervailing duty cases, it's not enough to prove that foreign governments are providing illegal subsidies to companies, or that companies are selling their products to Americans below market rates. There must also be evidence that imports from a foreign country are causing direct economic injury to U.S. industry. And what better time than a downturn to show flagging sales and lost market share?

Three U.S. paper companies and a union representing 6,000 mill workers filed a petition last fall against Chinese and Indonesian competitors and it argues that unfair dealings allowed Asian paper exporters to undercut domestic prices, causing mills to close and costing thousands of Americans their jobs.

In a preliminary ruling last week, the Department of Commerce sided with the U.S. firms, imposing extra duties on sheets of high-quality coated paper exported by Chinese and Indonesian producers.

Now goods from Asia Pulp & Paper (APP)--a company controlled by Indonesian palm-oil tycoon Eka Tjipta Widjaja that accounts for the majority of paper exports to the U.S.--will face prices marked up from 3.9% to 17.5% until a final ruling is issued in the fall. The petition targets a few other companies, but APP is by far the producer with the most clout.

"It is damaging to us," Terry Hunley, acting president of APP Americas, said in an interview Sunday. "We will take product and put it into different markets: Mexico, Canada, South America, Southeast Asia. To redirect it to other parts of the world will be relatively simple."

A vast majority of these countries, plus fast-developing economies like China, have growing demand for paper, Hunley adds.

That shift in priorities, APP argues, puts even more U.S. jobs at risk. Printers of glossy brochures, catalogues and viewbooks just across the border in Mexico or Canada would benefit from lower paper prices and pass those savings along to customers, who might be compelled to switch from costlier domestic printers.

Hana R. Alberts, 03.09.10, 09:30 PM EST

Source: www.forbes.com