The Commerce Department will impose countervailing duties on U.S. imports of aluminum foil from China, after determining that Chinese exporters have received government or “countervailable” subsidies in the range of 16.56 percent to 80.97 percent.
The U.S. aluminum industry applauded the Commerce Department for announcing this week that it will impose countervailing duties on U.S. imports of aluminum foil from China, after determining that Chinese exporters of this product receive government or “countervailable” subsidies in the range of 16.56 percent to 80.97 percent.
“This is an important step to begin restoring a level playing field for U.S. aluminum foil production, an industry that supports more than 20,000 direct, indirect, and induced American jobs, and accounts for $6.8 billion in economic activity,” said Heidi Brock, president and CEO of the Aluminum Association, in a statement.
“U.S. aluminum foil producers are among the most competitive producers in the world, but they cannot compete against products that are subsidized by the Chinese government and sold at unfairly low prices,” she added.
Commerce’s determination follows the association’s Trade Enforcement Working Group March 9 petitions for the department and the International Trade Commission (ITC) to carry out both antidumping and countervailing duty investigations into U.S. imports of Chinese aluminum foil. These were the first petitions of this type to be filed by the trade group in its nearly 85-year history.
The aluminum foil subject to Commerce’s antidumping and countervailing duty investigations is used in a variety of consumer and industrial applications, with specific uses that include: household foil, flexible and semi-rigid cookware, product packaging, automotive and HVAC heat exchangers, among other common uses.
Commerce calculated preliminary subsidy rates of 28.33 percent ad valorem for Dingsheng Aluminum Industries (Hong Kong) Trading Co., Ltd., and 16.56 percent for Jiangsu Zhongji Lamination Materials Co., Ltd. These were the only two companies that cooperated with the department’s countervailing duty investigation.
Chinese aluminum foil producer Loften Aluminum (Hong Kong) Ltd. refused to cooperate, while Manakin Industries claimed to be an importer. According to Commerce, however, Manakin Industries and Suzhou Manakin Aluminum Processing Technology Co., Ltd. (Suzhou Manakin) worked jointly to export Chinese aluminum foil to the United States. Accordingly, both companies’ aluminum foil exports to the United States will receive countervailing duty rates of 80.97 percent.
All other Chinese exporters/producers of aluminum foil will receive a countervailing duty rate of 22.45 percent.
According to Commerce, U.S. imports of Chinese aluminum foil in 2016 were valued at an estimated $389 million. The volume of these imports increased from 99.1 million tons to more than 137.5 million tons, or by nearly 40 percent, between 2014 and 2016.
U.S. aluminum foil producers are among the most competitive producers in the world, but they cannot compete against products that are subsidized by the Chinese government and sold at unfairly low prices. – Heidi Brock, CEO Aluminum Association
China was ranked the largest supplier of aluminum foil to the U.S. market by 2016, accounting for more than 70 percent of all imports, the Aluminum Association said.
Commerce is expected to announce its final determination regarding this countervailing duty investigation by Oct. 23, unless the deadline is extended, while the ITC will make its final determination by Dec. 17. If either Commerce or the ITC final determination is negative, no countervailing duty order will be issued.
In addition, Commerce is expected to issue its preliminary duty determination in the antidumping portion of its Chinese aluminum foil imports investigation by Oct. 5. Dumping occurs when a foreign company attempts to sell its products in the United States at less than fair value.
If an affirmative preliminary antidumping determination is issued by Commerce, U.S. importers will then be required to post cash deposits or bonds on all entries of aluminum foil from China in the amount of the subsidy and dumping margin calculated by the agency.
Separately, Commerce initiated a so-called 232 investigation April 27 to consider whether global aluminum overcapacity, dumping, illegal subsidies, and other factors threaten U.S. economic security and military preparedness. In addition to numerous commercial products, aluminum is used for myriad military applications, such as the construction of jet fighters and naval vessels.
In a rare display of cross-border trade solidarity, the Aluminum Association and Aluminum Extruders Council in June urged Commerce to keep the 232 investigation focused on Chinese aluminum overcapacity, and “exempt Canadian imports and other foreign producers such as the European Union who are not the primary contributors to rising global overcapacity.”
The goal of this action, according to the associations, is to minimize any potential disruption to legitimate cross-border trade in aluminum products.
“The U.S. aluminum industry has long relied on Canada as a vital trading partner,” the two trade groups explained to Commerce. “For instance, it is estimated that the average car part will cross the U.S.-Canada border six times before final use. Furthermore, Canadian factories are defined under U.S. law as part of our National Defense Technology and Industrial Base.
“Any action that needlessly impedes the flow of metal between the U.S. and Canada would seriously damage supply chains that the domestic industry has built over decades, and put at risk 97 percent of jobs in the U.S. aluminum industry,” they said.