The United States has filed a trade enforcement complaint in the World Trade Organization today concerning China’s continued subsidization of its aluminum producers.
The United States has filed a trade enforcement complaint in the World Trade Organization today concerning China’s continued subsidization of its aluminum producers.
The Office of the U.S. Trade Representative said the Chinese subsidies have artificially expanded China’s aluminum industry and output, resulting in a significant reduction in global aluminum prices.
“Artificially cheap loans from banks and low-priced inputs for Chinese aluminum are contributing to excess capacity and undercutting American workers and businesses,” said outgoing U.S. Trade Representative Michael Froman in a statement.
Members of the U.S. Congressional Aluminum Caucus praised the Obama administration for taking action against China in the WTO.
“The aluminum industry has flourished for more than a century, but today American smelters are being shuttered. Even though aluminum demand has increased in the United States, domestic production has plummeted,” said Rep. Mike Kelly, R-Pa., a member of the caucus on Capitol Hill. “With unfair subsidies and state-controlled banks, China has quadrupled its aluminum exports over the past decade, which has flooded the world market and depressed prices. We must hold China accountable.”
“Chronic overcapacity in China resulting from China’s failure to transition to a market economy has been identified as a problem in a number of sectors,” the USTR said. “In this case, we are seeking to address one core aspect of this problem by challenging the use of subsidies that have generated overcapacity.”
The USTR noted in the face of falling aluminum prices that China has continued to expand or build new aluminum production facilities. Between 2007 and 2015, Chinese primary aluminum production increased by 154 percent and capacity rose 243 percent, while global prices for dropped 46 percent. Also during this period, USTR said U.S. primary aluminum production decreased 37 percent and capacity decreased 46 percent, even though overall U.S. consumption for this metal has increased. “The number of U.S. aluminum smelters fell from 14 in 2011 to five in 2016, with only one operating at full capacity,” USTR said.
“China’s subsidies have done enormous damage to the U.S. and global aluminum industries,” said Michael Bless, president and chief executive officer of Century Aluminum, in a statement. “Following a series of closures due to Chinese overcapacity, Century operates three of only five remaining smelters in the United States.
“USTR’s decision to challenge these unreasonable, illegal, and harmful subsidies is an important step towards a long-term solution for the global aluminum industry, and we are thankful for the administration’s efforts on the industry’s behalf,” Bless added.
U.S. files WTO complaint against Chinese aluminum
