US aluminum industry representatives will urge the Department of Commerce to target Chinese overcapacity and subsidies in both the primary and downstream sectors, and to ensure that any Section 232 trade remedies do not impact imports from Canada and the EU, the Aluminum Association said Wednesday.
The association's comments will be submitted to Commerce, and its testimony will be presented Thursday at a public hearing on Section 232 National Security Investigation of Imports of Aluminum.
The comments indicated the industry prefers a government-to-government agreement with China to address the overcapacity, rather than tariffs, but implied if tariffs are imposed, they should be limited.
"In evaluating possible actions that may be appropriate for our industry, the Aluminum Association urges the Department of Commerce to focus on the unique characteristics of the aluminum industry, which differ in important respects from the steel industry that is being investigated in a concurrent Section 232 proceeding," the association said.
The submission pointed out that while the US steel industry has frequently used US trade laws to target dumped and subsidized imports from a "broad array of countries," the aluminum industry has generally benefited from fair international trade in aluminum and has only filed a few unfair trade cases in the last decade, all focused on China.
"As such, we urge the Commerce Department and the Administration to focus any action that may be taken in connection with this investigation on the significant negative impacts that are resulting from the massive overcapacity to produce aluminum and aluminum products in China, frequently with the assistance of subsidies provided by the Government of China," the association said.
The industry statements alluded to the fact that aluminum producers and fabricators have joint ventures and other partnerships with aluminum companies around the world, and duties targeting imports from those countries could hurt US business.
The association stressed that "any remedy should not interfere with the current trading relationship between the United States and critical trading partner countries which have been determined by the Department of Commerce to be operating as market economies (especially Canada and the European Union, and which support US aluminum production and jobs, and are highly integrated with North American supply chains)."
Marco Palmieri, president of Novelis North America, will testify specifically that "Canada should be excluded from any remedy or recommendation made in the department's final report," citing the fact that Novelis' automotive parts production may involve aluminum crossing the border four times in manufacturing.
Garney B. Scott III, president and CEO of Scepter, went even further to say that "US border measures will not fully address the problems we face because the domestic aluminum industry competes globally and has international supply chains."
Scott's testimony argues that "unless a broader agreement is negotiated to reduce and eliminate the massive overcapacity in China, the negative effects will persist and continue to threaten the US industry's long-term health and vibrancy."
To balance its production with domestic demand, China needs to close or idle at least 2 million mt/year of smelter and semi-finished plant capacity, Scott said.
Heidi Brock, president and CEO of the Aluminum Association, also stressed that downstream industries should not be disadvantaged. "Specifically, any remedy recommended to the President should ensure that beneficial effects are experienced by producers and fabricators of intermediate aluminum products that are used in manufacturing finished products," her testimony said.
The Aluminum Extruders Council testified at the US International Trade Commission last year that duties on P1020 or billet could hurt the extrusion industry.
Palmieri's testimony points out that "US smelting operations cannot meet the domestic demand for primary aluminum." He described product lines where Novelis has lost out to Chinese producers, and warned that Chinese producers will increase production of automotive aluminum products in the next few years. He said that "relief is needed for the entire aluminum supply chain -- including downstream rolled products."
While the Aluminum Association statements stressed the importance of aluminum to national security, particularly highlighting high-purity aluminum, Palmieri concluded that "if trade measures under this investigation only were enacted to protect the aluminum used directly in defense-related products, such remedies would not secure the stability of the entire domestic aluminum industry, nor its associated hundreds of thousands of US jobs."
