USW asks US government to impose a temporary tariff on imported aluminum

The United Steelworkers (USW) on April 18 petitioned the US government to impose temporary tariffs on imported aluminum.

According to the USW, low-priced imported unwrought aluminum, the aluminum made at smelters and used in a variety of manufactured goods, has cost the US 6500 decent paying manufacturing jobs and threatens the very existence of a key domestic industry.

“Aluminum is vital to our national and economic security, and this (petition) will help us retain and begin to rebuild domestic production of primary unwrought aluminum, which has reached critically low levels as a result of flooding imports,” said Leo Gerard, USW president. “By the end of June, the industry will be operating at only 25 percent of 2011 production levels, and the total number of laid off workers will reach 6,500.”

The union’s petition asks the US government’s International Trade Commission to find that cheap imports have seriously harmed the domestic aluminum industry and asks for a four-year tariff on imported aluminum produced from raw materials and not from recycled materials.

The commission is required to make a decision within 60 days. If the commission sides with the union, the President has 30 days to decide whether to implement a tariff or provide some other relief.

The union is proposing that a tariff of 50 percent be imposed for the first year. The rate drops to 45 percent in the second year, 40 percent in the third year, and 35 percent in the fourth year.

According to USW, cheap aluminum imports are the result of overproduction in China, which has caused a glut of aluminum in the global market.

If after four years, the glut subsides and prices stabilize at sustainable levels, the tariff would be lifted.

“The USW’s trade (petition) is intended to provide needed relief,” said Tom Conway, USW International Vice President. “We are requesting four years of increased tariffs, with the tariffs capped at a price allowing domestic producers to effectively operate and, hopefully, restore production.”

Since 2011, the market share of domestically produced aluminum has declined by 19.44 percent; meanwhile, the market share of imported aluminum has increased by 19.66 percent, nearly a 40 point spread.

Canada is the main exporter of aluminum to the US, followed by the United Arab Emirates, Russia, Qatar, and Argentina.

The influx of cheap imported aluminum has left the domestic aluminum producers reeling.

“In states all across the country, America’s aluminum producers have (been) closed, idled, or are at risk,” said Gerard. “Over just five years, we’ve seen the number of smelters plummet. In 2011 there were 14 smelters in the United States. Today there are only eight, of which only five are currently operating and one is expected to be idled at the end of June. Two of the five now operating are at 50 percent or less of capacity.”

The union’s petition also asks that the US government negotiate with China to reach an agreement on how to end its overproduction of aluminum. The aim of such an agreement would be to restore aluminum prices to sustainable levels.

“It is critical that the supply-demand imbalance be addressed quickly and effectively by the Obama administration,” said the USW’s press release on its petition. “China and the United States have been discussing China’s excess capacity as part of the Joint Commission on Commerce and Trade (JCCT) process, and China has internally recognized it has massive excess capacity in primary unwrought aluminum. What is needed is an actual correction of the imbalance and temporary relief for domestic producers until that is achieved.”

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