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September 19, 2016

MSCI Files Comments With U.S. Trade Representative On Chinese Aluminum Overcapacity

Last week the Metals Service Center Institute (MSCI) submitted a written statement to the U.S. International Trade Commission (ITC) regarding the competitive conditions affecting the U.S. aluminum industry. 

MSCI argued that federal policymakers must take significant action to strengthen the U.S. aluminum industry, whose shipments are still well below their pre-recession peak. According to MSCI data, shipments of aluminum in 2015 were more than 19.5 percent below 2006 levels. MSCI argued the causes of this stagnation are twofold: The growing disjunction between global aluminum-making capacity and global aluminum demand, and the substantial undervaluation of the Chinese currency. 

In its testimony, MSCI urged Washington policymakers to take a thoughtful approach to the issues affecting the aluminum industry. MSCI explained, “Simply increasing the price of imported aluminum, through special tariffs or otherwise, will inevitably increase the input costs of U.S. manufactured aluminum products, potentially making important segments of the U.S. manufacturing base less competitive in the global economy.” 

As such, MSCI recommends federal policymakers: 1) Vigorously monitor compliance with free trade agreements and promptly take action against violators; 2) Engage with trading partners directly to reduce global excess capacity through negotiation, both bilaterally and multilaterally; 3) Make it a stated principal objective of U.S. trade policy to target excess capacity in countries that increase capacity through market distorting policies; 4) Avoid unintended damage to U.S. manufacturers that utilize aluminum in their finished products by expanding efforts to enforce antidumping and countervailing duties, which currently cover only aluminum extrusions, and to fight circumvention of such duties by covering additional unfairly traded aluminum-containing products imported from China; 5) Declare that the Chinese government is a currency manipulator and initiate bilateral negotiations to address the causes of the undervaluation, and; 6) Resist efforts by China to be declared a “market economy” for purposes of enforcing the anti-dumping laws of the United States and other countries. 

MSCI’s written submission will be followed by oral testimony by MSCI Board of Directors Vice Chair and President and Chief Operating Officer of O’Neal Industries R. Holman Head in Washington, DC on Thursday, September 29.