Paper industry cries foul over China.

The U.S. pulp and paper industry isn't very happy with China. The Chinese government is expected to invest $24 billion in new production capacity in the forest products sector over the next 10 years, according to the American Forest and Paper Association. "How can the U.S. compete with that?"

The paper association says it would like the U.S. government to impose duties on subsidized Chinese imports, but the current countervailing duty law excludes non-market economies like China. The House has passed a bill to eliminate this loophole, and the paper association is working with the Senate to pass a similar bill.

"However, even if corrected, these CVD laws are of no help when our companies are trying to compete with heavily subsidized Chinese products anywhere else in the world," says AF&PA.

China has no qualms about protecting its own industry. The country recently imposed duties of between 16 percent and 65.2 percent on U.S. kraft linerboard used for corrugated boxes entering the Chinese market. The Chinese ruled in May that the United States and three other counties were dumping kraft linerboard in China and that these imports were injuring Chinese companies.

"The Chinese presented no factual justification in finding that imports from the U.S. were causing injury to the Chinese industry--in clear violation of their obligations under World Trade Organization rules," says AF&PA. "The fact is that, during the time our industry was accused of dumping our products, our share of the Chinese market actually decreased, while the Chinese linerboard industry significantly increased its own marketshare. Most other indices of economic performance were positive for the Chinese industry. In light of that, it is hard to see where the Chinese found damage to their domestic industry necessary to initiate dumping penalties on our companies."