31 March 2017
U.S. Aluminium Producers Target Alleged Unfair Practices by Mainland China
The U.S. aluminium industry has taken or supported a number of actions in recent months aimed at combating a range of unfair trade practices that are allegedly being pursued by mainland China. This includes the filing on 9 March by the Aluminum Association’s Trade Enforcement Group of antidumping and countervailing duty cases against mainland Chinese aluminium foil made from an aluminium alloy that contains between 92 and 99 percent aluminium. This action is particularly noteworthy because it marks the first time the Aluminum Association has filed trade remedy cases on behalf of its members in its nearly 85-year history.
The product covered by these investigations is aluminium foil having a thickness of 0.2 mm (0.00787 inches) or less, in reels exceeding 25 pounds, that is not backed, etched for use in capacitors or cut to shape. Where the nominal and actual measurements vary, a product is within the scope if application of either the nominal or actual measurement would place it within the scope based on the definitions set forth above. Subject goods are currently classifiable under HTSUS subheadings 7607.11.3000, 7607.11.6000, 7607.11.9030, 7607.11.9060, 7607.11.9090 and 7607.19.6000. Aluminium foil provides a complete barrier to light, oxygen, moisture and bacteria and for this reason is used extensively in food and pharmaceutical packaging. It is also used to manufacture thermal insulation for the construction industry, fin stock for air conditioners, electrical coils for transformers, capacitors for radios and televisions, and insulation for storage tanks.
The Aluminum Association is alleging dumping margins ranging from 38 percent to more than 134 percent of the value of the imported aluminium foil, and also contends that mainland Chinese producers benefit from 27 separate government subsidy programmes. Aluminium products currently subject to trade remedy measures in the United States include aluminium extrusions classified under a range of tariff lines (AD/CV duty orders in place since May 2011) as well as refined brown aluminium oxide (AD duty order in place since November 2003).
The U.S. aluminium industry is also a strong supporter of the dispute settlement case launched by the United States at the World Trade Organisation on 12 January 2017 involving allegations that Beijing provides illegal subsidies to certain producers of primary aluminium. The United States contends that mainland China ostensibly provides such subsidies through artificially cheap loans from banks as well as artificially low-priced inputs for aluminium production, such as coal, electricity and alumina. The United States argues that these subsidies have led to a chronic state of overcapacity that has in turn resulted in price-related and other harmful effects on a global basis.
Meanwhile, three associations representing aluminium producers along the whole value chain in the United States, Europe and Canada are urging G-20 leaders to create a global forum on aluminium excess capacity at the 7-8 July summit in Hamburg, Germany. The Aluminum Association, European Aluminium and Aluminium Association of Canada indicated in a 15 March letter that mainland China’s state-sponsored support is contributing to an unsustainable structural overcapacity that will impact growth and contribute to heightened instability until it is addressed. The associations contend that the massive increase in production and the excess capacity have put downward pressure on prices, generating significant economic and employment losses and threatening the competitiveness of both upstream and downstream aluminium producers. Mainland Chinese manufacturers currently supply 53 percent of all aluminium produced globally and mainland China’s capacity is expected to increase by an additional 24 percent by 2020.
At last year’s G-20 summit, leaders recognised that “excess capacity in steel and other industries is a global issue which requires collective responses” and agreed to create a global forum on steel excess capacity in order to increase information sharing and co-operation. The associations therefore believe this year’s summit should recognise the excess capacity that negatively impacts the competitiveness of the global aluminium industry by creating a global forum on this matter.