The Aluminum Association (AA), the Aluminium Association of Canada (AAC), and European Aluminium jointly issued the following statement on the Section 232 Investigation on the effects of aluminum imports on national security in the U.S. These organizations represent all major aluminum producers, fabricators and recyclers in the U.S., Canada, and Europe — an industry that employs over 500,000 direct jobs and more than 1.5 million indirect jobs in these regions.
The Secretary of Commerce initiated the Section 232 investigation on aluminum imports on April 26, 2017 in light of the large volumes of excess global aluminum production and capacity – much of which results from foreign government subsidies and other unfair practices – which distort the U.S. and global aluminum markets. According to the Department of Commerce (DOC), U.S. imports of aluminum increased by 18% in 2016 compared with those in 2015, while at the same time U.S. production decreased (with only two U.S. smelters remaining operational today). Furthermore, U.S. imports of semi-fabricated aluminum products from China grew 183% between 2012 through 2015. Chinese imports of aluminum grew from zero percent of the total U.S. aluminum foil market in 2004 to 22% of the market today.
The Section 232 Investigation considers: domestic production needed for projected national defense requirements; domestic industry’s capacity to meet those requirements; related human and material resources; the importation of goods in terms of their quantities and use; the close relation of national economic welfare to U.S. national security; loss of skills or investment, substantial unemployment and decrease in government revenue; and the impact of foreign competition on specific domestic industries and the impact of displacement of any domestic products by excessive imports. By law, the Secretary of Commerce has 270 days to present the DOC’s findings and recommendations.
In their comments, the three aluminum associations state:
As organizations representing aluminium producers along the whole value chain in the US, Canada, and Europe, we are writing to draw attention to the global market imbalances in the aluminium industry, caused in particular by the enormous excess capacity in China.
We acknowledge the issue of Chinese aluminium excess capacity as the root cause of the challenges faced by the aluminium industries in North America and in Europe. Overcapacity encourages unfair trading practices and displacement of domestic production, which cause global imbalances in the aluminium industry and distort international trade flows.
This is why European Aluminium, the Aluminium Association of Canada and the American Aluminum Association have jointly urged governments of the G20 to address global aluminium overcapacity. G7 leaders have already committed to working together to push for the removal of all trade-distorting practices so as to foster a global trade system that is rule-based, fair and creates a level playing field for aluminium producers, manufacturers and recyclers around the world.
Moreover, the aluminium associations of the US, Canada and Europe, can testify that there is no unfair competition between our three regions to the disadvantage of one of the industries we represent. On the contrary, the aluminium industries are interlinked, adding value to our societies as a whole and strengthening national security in the US.
A stable trading environment is to the advantage of aluminium producers from the entire value chain, especially to companies promoting innovation in their research and development centres located in the US, Canada and Europe. Therefore, we urge our governments not to hamper the positive effects that trade and cooperation can bring among companies in our regions. We fully advocate for a fair, equitable and rules based global trading system.
Our three regions also want to cooperate and trade more on a global scale. However, we acknowledge that excess capacity in the Chinese aluminium industry brings our industry in a large imbalanced situation. The Chinese excess capacities in aluminium as major cause of unfair trade and displacement of domestic production should be the focus for our countries, including all effective remedies that target the underlying issue that is affecting global aluminium trade. In that way, we will also minimize unintended effects on global trade flows.
We want a system that is fair and creates a level playing field for our regional aluminium value chains. We encourage our governments to take enforceable actions that address aluminium overcapacity. We believe that with the right monitoring tools, a negotiated solution to this global challenge will benefit all aluminium producers and consumers worldwide.
Edited to Add (6/21/2017): The Aluminum Association released its written testimony along iwth the testimony of industry players to be presented at the DOC’s hearing on the 232 Investigation to be held June 22.
“There are three reasons why it is appropriate to look at aluminum as a strategic material, and the aluminum industry as a highly significant industrial contributor to national security.,” writes Heidi Brock, president and CEO of The Aluminum Association, in her testimony, noting the following:
- “First, aluminum is used in numerous national defense applications, including major components of Army ground vehicles, jets flown by the Air Force, and warships deployed by the Navy, in addition to armaments. In short, aluminum is in some of the most conflict-ridden hotspots on the globe keeping America’s servicemen and women safe.”
- “Second, aluminum is a critically important material for the nation’s infrastructure. Aluminum products are essential for energy generation and transmission, for the construction of bridges and buildings, and for the machinery and equipment that build and maintain that infrastructure.”
- “And third, aluminum manufacturing and the products made from aluminum support significant economic activity that contributes to the well-being of Americans and fosters problem-solving innovations in packaging, jet planes, wind turbines, trucks and cars, electronics, among many other things.”
Marco Palmieri, senior vice president and president, Novelis North America, wrote, “Novelis believes it is important for the Department to recognize that the aluminum industries of the United States and Canada are intertwined, with Canada playing a vital role in support of U.S. aluminum manufacturing efforts. U.S. smelting operations cannot meet the domestic demand for primary aluminum. At Novelis, we do source both primary and recycled metal from the U.S. But, because it is not possible for us to obtain all of the primary aluminum that we need through our U.S. purchases, we also rely on primary aluminum originating from Canada.” While Palmieri recognizes the need for fair trade for a level playing field and the problems associated from imports originating from countries like China with excessive overcapacity driven by government subsidies in his statement, he urges the DOC to exclude Canada from any remedy or recommendation made in the Department’s final report.
In his statements, Garney B. Scott III, president and CEO, Scepter, Inc., focused on the impact of the trend of overcapacity in China and its affect on the industry. He writes, “A 232 remedy should address the negative impacts of Chinese overcapacity in the United States and help protect an industry that is vital to the country’s national and economic security.”