The Aluminum Association responds to Section 232 report release

The Aluminum Association, Arlington, Virginia, has responded to the U.S. Department of Commerce recently releasing Section 232 reports on the national security implications of imported aluminum.

Secretary Wilbur Ross released reports Feb. 16 on the Department of Commerce’s investigations into the impact on national security from imports of steel mill products and from imports of wrought and unwrought aluminum.

Among the key findings of the aluminum report include:

• Aluminum imports have risen to 90 percent of total demand for primary aluminum, up from 66 percent in 2012.
• From 2013 to 2016 aluminum industry employment fell by 58 percent, six smelters shut down, and two of the remaining five smelters are operating at capacity, even though demand has grown considerably.

Secretary Ross has recommended to President Trump three alternative remedies for dealing with the excessive imports of aluminum. These would cover both aluminum ingots and a wide variety of aluminum products, including:

• a tariff of at least 7.7 percent on all aluminum exports from all countries; or
• a tariff of 23.6 percent on all products from China, Hong Kong, Russia, Venezuela and Vietnam. All the other countries would be subject to quotas equal to 100 percent of their 2017 exports to the United States; or
• a quota on all imports from all countries equal to a maximum of 86.7 percent of their 2017 exports to the United States.

The association says in a statement that it “believes that any remedial actions taken by the president in connection with the Commerce Department’s report should embrace the following principles:

1. Specifically address Chinese overcapacity and its effects, while avoiding unintended consequences for U.S. production and jobs.
   
2. Not interfere with the current trading relationship between the United States and critical trading partner countries (including Canada, the European Union and others) that operate as market economies, support U.S. aluminum production and jobs, and are highly integrated with North American supply chains. Of particular note, the North American aluminum industry has a long-term, essential trading relationship with Canada, which supports U.S. jobs and industry growth. By statute, Canada is considered part of the nation’s defense industrial base.
   
3. Address the needs of the domestic aluminum value chain, including both primary and downstream U.S. production. Specifically, any action should ensure that producers and fabricators of intermediate aluminum products used in manufacturing finished products experience beneficial effects.
   
4. Adopt a monitoring system (similar to Steel Import Monitoring and Analysis System) for aluminum imports and particularly for imports from countries that pose a circumvention threat (Vietnam, Indonesia, Malaysia, Thailand, etc.).”

The Aluminum Association President and CEO Heidi Brock says in the statement, “We look forward to working with the president on a final decision that helps support continued growth in the U.S. aluminum industry. Ultimately, we favor a negotiated, enforceable government-to-government agreement with China on overcapacity.”

The Aluminum Association continues in its statement, “The U.S. aluminum industry helps manufacturers produce sustainable and innovative products, including more fuel-efficient vehicles, recyclable packaging, greener buildings and modern electronics. The industry supports 161,000 direct jobs and more than 700,000 jobs when indirect and induced impacts are considered. Further, the industry creates $75 billion in direct economic impact and $186 billion in total impact, around 1 percent of U.S. GDP (gross domestic product).

In 2017, the aluminum industry enjoyed its eighth straight year of continued domestic demand growth. However, our most recent estimates indicate that imported aluminum now satisfies roughly 33 percent of all demand—a record. Over the past five years, domestic imports of semifabricated aluminum have grown by around 53 percent. This uptick in imports is being driven in large part due to aluminum overcapacity in China. In that same five-year period, Chinese imports of semifabricated products increased more than 228 percent. According to the latest industry data, Chinese primary aluminum capacity grew by 9 percent in 2017 while capacity in the rest of the world declined by about 0.5 percent. Chinese primary aluminum capacity exceeded production by more than 9 million tons last year, which is five times all existing capacity in the United States.”

In mid-January 2018, The Aluminum Association responded to news that the Department of Commerce delivered to the White House Jan. 19, 2018, its Section 232 report prepared in connection with the agency’s investigation of the national security implications of imported aluminum.

At that time, Brock said the association supports addressing Chinese overcapacity and protecting trading relationships between the U.S. and “critical” partner countries.