The U.S. has proposed rules to track aluminium imports more minutely, in a way that could address industry demands to barrier Chinese supply that evades tariffs.
The Donald Trump administration’s import tariff is imposed towards aiming to protect against the excess foreign supply of the metal, concerns have persevered that aluminium from the world’s biggest producer, China, is still engulfing into the market.
Some Chinese supplies are first sent to another nation that is free from duty. It’s then melted and reformed before being shipped again, concealing its true origin. Criticism about surplus metal entering the U.S. via such transhipment and re-labelling to sidestep trade laws has preceded the Trump administration.
As per the proposed new U.S. rules, importers will be required to identify the country from which the aluminium was originally obtained. They will also need to get a license for shipments. The program is modelled on a steel-import monitoring system that’s been in place for years.
The Commerce Department’s regulations, that is subject to a 30-day public comment period and would take another 30 to 90 days to be implemented, would give customs officials a strengthened tool to more quickly identify and react to improper trading of U.S.-bound aluminium.
The US Commerce Secretary Wilbur Ross said on 29th April’20: “It is yet another affirmation of our commitment to using all available tools to combat circumvention and evasion of duties. Today’s proposed regulations are an important step forward in ensuring that trade in aluminium is free, fair, and reciprocal.”
Under the new North American trade deal signed last year, the U.S., Canada and Mexico all agreed to ramp up efforts to trace where metal comes from originally to stop the diversion of shipments from other nations to dodge tariffs. After the agreement, Canadian Prime Minister Justin Trudeau acted to beef up the government’s power to respond to the dumping of aluminium in the country.
In December’19, the Aluminium Association of Canada complained that the new North American trade law has failed to implement rules that would prevent transhipment of metal through Mexico. Chief Executive Officer Jean Simard said it made Mexico “more or less China’s North American backyard to dispose of the products of its overcapacity.”
Mexico’s aluminium association, Instituto Mexicano del Aluminio, voiced its support for the Commerce Department’s proposal, saying that it will do all it can to help the U.S. stop unfair trade practices.
Association President Fernando Garcia stressed that: “The Asian country accounts for 1% or less of Mexico’s primary and semi-finished imports. The majority of aluminium imported from China is can sheet, almost all of which the Latin American nation consumes.”
Garcia also said: “I want to make clear that Mexico is not doing any kind of irregular practices with the transformation of materials coming from China and then resent to the USA. The association meets with Mexico’s commerce department monthly to analyze all imports and exports.”
The U.S. Commerce Department is proposing just as the coronavirus pandemic has crushed demand in everything from retail goods to bank financing to commodities.
U.S. aluminium has been particularly affected, with all domestic smelters sink at current prices. Alcoa Corp., the biggest American producer, said last week that it would curtail all production at one of its smelters in Washington State.
If the new rules get implemented, it would include monitoring imports of so-called semi-finished aluminium products. Alcoa has for years complained about China’s surging output of such products that have not been the subject to the Asian country’s export taxes.
It needs to be kept in mind that it is Semi-finished, not primary aluminium, is the principal form of China’s market penetration into the rest of the world. Alcoa’s Chief Executive Officer Roy Harvey said in January: “China is flooding the global market and effectively displacing output of the primary form of the metal.”
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