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DERIVATIVES AND HEDGING ACTIVITIES (Note)
 9 Months Ended
Sep. 30, 2021
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Derivatives and Hedging Activities [Note Text Block]

As a multinational company, International Paper is exposed to market risks, such as changes in interest rates, currency exchange rates and commodity prices.

The notional amounts of qualifying and non-qualifying financial instruments used in hedging transactions were as follows:

In millionsSeptember 30, 2021 December 31, 2020
Derivatives in Cash Flow Hedging Relationships:
Foreign exchange contracts (USD)$108 $85 
Foreign exchange contracts (EUR)— 187 
Derivatives Not Designated as Hedging Instruments:
Electricity contract (MWh)0.3 0.2 
The following table shows gains or losses recognized in AOCI, net of tax, related to derivative instruments: 

 Gain (Loss) Recognized in AOCI on Derivatives (Effective Portion)
 Three Months Ended
September 30,		Nine Months Ended
September 30,
In millions2021202020212020
Derivatives in Cash Flow Hedging Relationships:
Foreign exchange contracts$(4)$(4)$3 $(34)
Total$(4)$(4)$3 $(34)
Derivatives in Net Investment Hedging Relationships:
Foreign exchange contracts$6 $— $18 $— 
Interest rate contracts— — — 24 
Total$6 $— $18 $24 

During the next 12 months, the amount of the September 30, 2021 AOCI balance, after tax, that is expected to be reclassified to earnings is a loss of $2 million.

The amounts of gains and losses recognized in the statement of operations on qualifying and non-qualifying financial instruments used in hedging transactions were as follows:

 Gain (Loss) Reclassified from AOCI Into Income (Effective Portion)Location of Gain (Loss)
Reclassified from AOCI
(Effective Portion)
 Three Months Ended
September 30,		Nine Months Ended
September 30,		 
In millions2021202020212020 
Derivatives in Cash Flow Hedging Relationships:
Foreign exchange contracts$8 $(6)$9 $(26)Cost of products sold
Total$8 $(6)$9 $(26)
 Gain (Loss) Recognized in IncomeLocation of Gain (Loss)
In 
Statement
of Operations
 Three Months Ended
September 30,		Nine Months Ended
September 30,		 
In millions2021202020212020 
Derivatives in Fair Value Hedging Relationships:
Interest rate contracts$— $— $— $38 Interest expense, net
Debt— — — (38)Interest expense, net
Total$— $— $— $— 
Derivatives in Net Investment Hedging Relationships:
Foreign exchange contracts— 1 — 2 Net (gain) losses on sales and impairments of businesses
Total$— $1 $— $2 
Derivatives Not Designated as Hedging Instruments:
Electricity contract$6 $1 $13 $(2)Cost of products sold
Foreign exchange contracts5 — (1)— Cost of products sold
Total$11 $1 $12 $(2)

Fair Value Measurements

The Company has not changed its valuation techniques for measuring the fair value of any financial assets or liabilities during the year. Transfers between levels, if any, are recognized at the end of the reporting period.
The following table provides a summary of the impact of our derivative instruments in the balance sheet:

Fair Value Measurements
Level 2 – Significant Other Observable Inputs
 
 Assets Liabilities 
In millionsSeptember 30, 2021 December 31, 2020 September 30, 2021 December 31, 2020 
Derivatives designated as hedging instruments
Foreign exchange contracts – cash flow$3 $5 $5 $8 
Total derivatives designated as hedging instruments3 5 5 8 
Derivatives not designated as hedging instruments
Electricity contract11 — — 1 
Total derivatives not designated as hedging instruments11   — — 1 
Total derivatives$14 (a)$5 (b)$5 (c)$9 (d)
 
(a)Includes $13 million recorded in Other current assets and $1 million recorded in Deferred charges and other assets in the accompanying consolidated balance sheet.
(b)Included in Other current assets in the accompanying consolidated balance sheet.
(c)Includes $4 million recorded in Other current liabilities and $1 million recorded in Other liabilities in the accompanying consolidated balance sheet.
(d)Includes $7 million recorded in Other current liabilities and $2 million recorded in Other liabilities in the accompanying consolidated balance sheet.

The above contracts are subject to enforceable master netting arrangements that provide rights of offset with each counterparty when amounts are payable on the same date in the same currency or in the case of certain specified defaults. Management has made an accounting policy election to not offset the fair value of recognized derivative assets and derivative liabilities in the balance sheet. The amounts owed to the counterparties and owed to the Company are considered immaterial with respect to each counterparty and in the aggregate with all counterparties.