October 3, 2016

MSCI Testifies In Front Of International Trade Commission On Global Aluminum Glut

In testimony before the U.S. International Trade Commission (ITC) last week, Metals Service Center Institute (MSCI) Board of Directors Vice Chair and President and Chief Operating Officer of O’Neal Industries R. Holman Head called for tougher government action to halt unfair and illegal trade practices, particularly by China, that have harmed the U.S. aluminum industry. Head urged “decisive action, and continued vigilant monitoring” in a program to address dumping, predatory pricing and currency manipulation. 

Head noted that MSCI data shows that U.S. shipments of aluminum in 2015 were down nearly 20 percent from their pre-recession peak in 2006 and said unfair trading practices by certain foreign governments, particularly China, whose economies are free market in name only are largely to blame for that fact. 

Head recommended that federal policymakers: 1) Vigorously monitor compliance with free trade agreements and promptly take action against violators; 2) Negotiate with trading partners directly to reduce global excess capacity; 3) Make it a stated principal objective of U.S. trade policy to target excess capacity in countries, such as China, that increase production through market distorting policies; 4) Expand efforts to enforce antidumping and countervailing duties, which currently cover only aluminum extrusions; 5) Declare that the Chinese government is a currency manipulator and immediately initiate negotiations to address the causes of the undervaluation; and 6) Resist efforts by China to be declared a “market economy” in the World Trade Organization, which would help insulate it from investigations and enforcement actions aimed at its market distorting, unfair trade practices. 

Click here to read Head’s full testimony before the ITC and click here to read the press release that MSCI issued after the testimony. 

The morning of the testimony, AL.Com, which owns the Birmingham News, ran an op-ed by Head and MSCI President and CEO Bob Weidner discussing global aluminum overcapacity and MSCI’s recommendations to the ITC to address it. That column is available here. American Metal Market also reported on MSCI’s efforts the day of the testimony. AMM subscribers can access that article here

The ITC is expected to release a report on its findings by the middle of next year. Click here to read more about Thursday’s proceedings, including testimony by organizations representing the Chinese and European Union aluminum sectors. 

The U.S. House Ways and Means requested an ITC investigation into this issue. Last week, the Ways and Means trade subcommittee also held a hearing on enforcement, and lack of enforcement, of U.S. trade laws. At the outset of that hearing, in which U.S. Trade Representative Michael Froman testified, Chairman David Reichert (R-WA) said, “Robust enforcement of our trade agreements and our trade laws is essential to ensuring that American businesses and workers are treated fairly by our trading partners” and argued “strong trade enforcement” must go “hand-in-hand with the opening of new markets through trade agreements …” 

The chairman of the full Ways and Means Committee, Rep. Kevin Brady (R-TX), also discussed this issue last week at the Peterson Institute for International Economics. Click here to read his remarks.