PITTSBURGH, April 18, 2016 /PRNewswire-USNewswire/ -- The United Steelworkers (USW) today filed a petition under Section 201 of U.S. trade law that seeks to stem a flood of imported primary unwrought aluminum that has seriously injured the American industry and threatens additional job and capacity losses.
A Section 201 petition allows President Obama to provide relief and implement an adjustment plan, if appropriate, once the U.S. International Trade Commission (ITC) finds imports are a substantial cause of the harm.
The USW petition claims that the domestic industry's circumstances are critical. In such cases, the ITC is required to make a preliminary decision within 60 days. If the decision is affirmative, the president has another 30 days to decide on providing provisional relief. With today's filing, a preliminary decision by the ITC should occur by June 17. If that is affirmative, the president would have until July 18 to decide on provisional relief.
Primary unwrought aluminum is produced from bauxite-derived alumina and comes in various purity grades with different alloys added for a wide variety of uses. Primary unwrought aluminum typically undergoes further processing by the original producer or other manufacturers.
"A flood of foreign imports and failed trade policies have decimated American manufacturing," said USW International President Leo W. Gerard. "Aluminum is vital to our national and economic security, and this case 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. 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.
"In states all across the country, America's aluminum producers have 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."
"We refuse to watch another domestic manufacturing sector suffer from failed trade policies," Gerard added. "This is a vital product for our aircraft and weapon systems. It's used in construction, manufacturing and in electrical transmission."
The Section 201 case addresses imports from around the world. The majority of the aluminum currently flooding into the U.S. market comes from Canada, the Middle East, Russia and Venezuela.
Primary unwrought aluminum is a worldwide commodity that is affected by supply-demand imbalances at the global level. When world prices decline, cheap imports force domestic producers to meet them or lose volume.
The world has been going through a period of significant imbalance between supply and demand in primary unwrought aluminum, principally caused by massive capacity additions in China that exceed growth in demand.
It is critical that the supply-demand imbalance be addressed quickly and effectively by the Obama administration. 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.
The USW's petition includes recommendations on how the president should respond if the ITC concludes critical circumstances exist and serious injury has occurred.
"The USW's trade case 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.
"The petition also calls for negotiations with our trading partners, principally China, seeking that they dismantle their overproduction and restore balance in global supply and demand.
"Aluminum, steel, paper and many other USW-represented sectors have been the targets of unfair trade. On top of that, world markets are being destroyed by China's non-market policies and practices. This vital case draws a line in the sand. We will not cede primary unwrought aluminum production."
In November, the congressionally-created U.S.-China Economic and Security Review Commission released a study that found, "Strong Chinese government support for its domestic aluminum sector has created vast overproduction, lowering global prices and squeezing the profitability of U.S. aluminum firms.
"While the U.S. and other global aluminum firms are restructuring and cutting back production to minimize financial losses, the Chinese government is stepping in to expand capacity and encourage exports, placing the entire U.S. aluminum smelting system at risk."
According to the consultancy AZ China, 90 percent of China's aluminum smelters are operating at a loss.
China has no natural advantage in producing aluminum, an energy intensive product. Yet, China added 79.5 percent of the global increase in capacity between 2001 and 2014.
China's production of aluminum grew by 650.8 percent from 3.25 million metric tons in 2001 to 24.40 million tons in 2014, while its capacity increased 723.5 percent from 4.25 million metric tons in 2001 to 35.0 million metric tons in 2014. As production increased, China's capacity utilization fell from 76.5 percent in 2001 to 69.7 percent in 2014.
The USW represents 850,000 workers in North America employed in many industries that include metals, rubber, chemicals, paper, oil refining and the service and public sectors. For more information: http://www.usw.org/.