AAEI, NFTC Differ on Whether 232 Remedies Should Apply to Primary Aluminum
The American Association of Exporters and Importers (AAEI) and the National Foreign Trade Council (NFTC) differed on whether import restraints on primary aluminum should be on the table for the Trump administration’s ongoing review of the national security impacts of aluminum imports. The Commerce Department posted comments on the administration's ongoing Section 232 investigation into aluminum imports last week (here). NFTC said that measures limiting importation of primary aluminum would hurt U.S. jobs supported by the aluminum industry and reduce exports of can sheet to Canada and Mexico, assuming primary aluminum costs rise (here).
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U.S. companies would be at a competitive disadvantage with foreign competitors if tariffs or quotas raise costs of primary aluminum imports, NFTC said. “As a result, these companies will face fewer export sales or be priced out of the global markets entirely, potentially leading to the relocation of some U.S. production overseas.” Trying to justify a broad tariff or quota for “all aluminum products” on a national security basis would embolden other countries to employ a similar rationale to counter U.S. exports of capital goods, civil aircraft, technology products, pharmaceutical products, or agricultural goods, NFTC said.
On the other hand, AAEI said (here) any import relief pursuant to the investigation should apply to only primary aluminum and exclude downstream products made from primary aluminum and basic aluminum shapes. The main national security concerns regarding aluminum relate to high-purity aluminum used for certain military jets and armored vehicles, which is manufactured in the U.S. AAEI said Commerce should consider employing the North American Industry Classification System to define primary aluminum, specifically code 331313, “Alumina Refining and Primary Aluminum Production.”
Including “further manufactured downstream products will inevitably create vague contours that will create unintended harm to the importing community,” AAEI said. “If the Department of Commerce does not identify the exact scope in advance, it will be impossible for interested parties to comment on the appropriateness or impact of import competition on the economic welfare and possible relevant factors that could cause a weakening of the national economy.” It would be too complicated for Commerce and other agencies involved in the Section 232 review to fully investigate how any import restraints on “the myriad of downstream products” made for subassemblies would affect the multifaceted defense industrial base, AAEI said.
But Sen. Shelley Moore Capito, R-W.Va., in her comments (here) said China’s 15 percent export duty on primary and scrap aluminum is crimping the ability of aluminum semi-product producers like Constellium Rolled Products in Ravenswood, W.Va., to buy lower-cost inputs. But China’s 13 percent value-added tax rebate for aluminum semi-product exports, which Capito called a subsidy, means greater competition for companies like Constellium, she said. Capito urged Commerce to consider whether Chinese overcapacity and unfair pricing is “the fundamental aluminum industry issue that needs to be addressed … for the whole value chain.” But tariffs or quotas on aluminum from Canada and/or the EU could hurt U.S. trade relations, national security and economic interests, she said.