ARLINGTON, VA, June 09, 2020 (GLOBE NEWSWIRE) -- The “American Primary Aluminum Association” (APAA), which represents only two aluminum companies in the United States, has made several inaccurate claims recently arguing for the re-imposition of Section 232 tariffs on aluminum imports from Canada into the U.S. Last year, the Trump administration wisely removed these tariffs amidst U.S.-Mexico-Canada Agreement (USMCA) negotiations. The Aluminum Association, which represents more than 120 companies across the entire industry value chain, strongly supported – and continues to support – this decision. Fully 97 percent of U.S. aluminum industry jobs are in mid-and-downstream production and processing. These jobs depend on a mix of domestic and imported primary aluminum to meet demand, including from countries like Canada.
As noted in a recent op-ed in Roll Call by Aluminum Association President & CEO Tom Dobbins, the Section 232 tariff program is not working for U.S. aluminum companies. The Aluminum Association has long argued for a more targeted U.S. trade policy focused on combatting Chinese aluminum overcapacity. Today, the Commerce Department is granting so-called “exclusions” from the tariffs on massive volumes of aluminum product including from non-market actors like China. “This dynamic is hurting aluminum workers today. Even before the pandemic, domestic aluminum demand was down more than 6 percent year-over-year — the first drop in nearly a decade,” the piece notes.
“There are clear problems with the Section 232 program but efforts to ‘Blame Canada’ miss the mark. To the extent the industry has seen a ‘surge’ in foreign imports in recent years, it has been in flat-rolled aluminum products from countries receiving Section 232 product exclusions. Many of these imports are the subject of ongoing antidumping and countervailing duty cases,” said Dobbins. “Everyone is entitled to their opinion on this issue, but facts are facts. Imports of primary aluminum from Canada today are consistent with long-term trends long pre-dating the imposition of Section 232 tariffs.”
Claim: Canadian imports are the central trade problem facing the U.S. aluminum industry today.
Reality: State-subsidized aluminum overcapacity in China continues to be the fundamental trade challenge facing the U.S. aluminum industry. While targeted trade enforcement activity, including successful antidumping and countervailing duty cases, have reduced imports of Chinese aluminum into the U.S. in recent years, China’s subsidy-driven overcapacity continues to grow. Over the past five years, aluminum overcapacity in China has grown by 60 percent and increasingly that metal is being exported to third party countries, further distorting global markets. Thanks to heavy state subsidies, China exported 5.14 million metric tons of semi-fabricated aluminum products in 2019, nearly matching record levels set in 2018.
Claim: The U.S. is seeing an unusually high level of imports of primary aluminum from Canada.
Reality: According to U.S. Census Bureau data, the share of imports of primary aluminum (7601) from Canada has barely budged over a 30-year period and is down significantly from levels even 10 years ago. Canada’s share of primary aluminum imports into the U.S. averaged 64.6 percent between 1990 and today and currently sits at around 64.7 percent. Over time, imports of primary aluminum from Canada into the U.S. have largely followed overall domestic aluminum demand, which has grown over the past decade. Even if every domestic smelter was fully operational, the U.S. could only meet approximately one-third of its demand for primary aluminum.
Claim: Imports of primary aluminum from Canada have “surged” since Section 232 tariffs were removed last year.
Reality: While it is true that imports of Canadian metal have increased, import volumes today are similar to 2017, prior to the implementation of Section 232 tariffs and the year that most closely resembles current U.S. production levels. This was the reference year used by the Commerce Department for its Section 232 investigation report on aluminum. The U.S. saw higher import increases of primary aluminum from Canada in 2013/2014 and 2018 than occurred following the removal of Section 232 tariffs on Canadian aluminum one year ago. Also of note is the July 2019 restart of the Aluminerie de Becancour (ABI) aluminum smelter in Quebec after the resolution of a labor dispute. Much of the short-term change in trade flows can be tied to this return to the market, which is still ongoing. The restart has, to a large extent, displaced imports from other countries in the Middle East and Asia. The full data set of the past 20 years of U.S. import data of primary aluminum from Canada is available here.
Claim: The Organization for Economic Cooperation & Development (OECD) has documented significant state subsidies to aluminum companies in Canada.
Reality: A 2019 report by the OECD examined the use of state subsidies in the aluminum industry globally. Using publicly available data, the report examined state support for 17 of the world’s largest aluminum companies. While each of the 17 firms received some level of government support by OECD’s definition, fully 85 percent of the identified subsidies went to five aluminum producing firms in China, representing $70 billion in direct support from the Chinese government over a 5-year period. According to the report, Canada received approximately $1 billion in non-financial subsidies of the type approved by the World Trade Organization (WTO) over the same period. This accounts for less than 2 percent of all subsidies documented by the OECD and zero percent of all financial subsidies.
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About The Aluminum Association
The Aluminum Association represents aluminum production and jobs in the United States, ranging from primary production to value added products to recycling, as well as suppliers to the industry. The association is the industry’s leading voice, representing companies that make 70 percent of the aluminum and aluminum products shipped in North America. The association develops global standards, business intelligence, sustainability research and industry expertise for member companies, policymakers and the general public. The aluminum industry helps manufacturers produce sustainable and innovative products, including more fuel-efficient vehicles, recyclable packaging, greener buildings and modern electronics. In the U.S., the aluminum industry supports $174 billion in economic activity and nearly 700,000 jobs. For more information visit https://www.aluminum.org, on Twitter @AluminumNews or at Facebook.com/AluminumAssociation.
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