Union seeks higher tariffs on U.S. imports of raw aluminum

Worker Kevin Daniels works on potline B at the Alcoa Intalco aluminum smelter west of Ferndale on Feb. 15, 2011.
Worker Kevin Daniels works on potline B at the Alcoa Intalco aluminum smelter west of Ferndale on Feb. 15, 2011.

An American labor union is pushing the United States to impose broad, steep tariffs on aluminum imports using a little-used but wide-ranging trade law that has riled the country’s trading partners in the past.

The effort by the United Steelworkers union comes with trade increasingly an election-year issue in the United States and elsewhere. More than three-quarters of the U.S. aluminum smelting industry that existed five years ago will have been idled or shut down by this summer as imports have surged, according to the union’s legal petition.

Plunging aluminum prices last fall led to Alcoa announcing it would curtail the aluminum smelter operations at the Intalco Works facility near Ferndale. The curtailment is slated to begin at the end of June, laying off around 465 workers, but Alcoa is currently considering a new power agreement with the Bonneville Power Administration that could keep the smelter operating through at least February 2018. The U.S International Trade Commission is also looking into charges of market manipulation in the aluminum industry.

The union blames China’s rising exports, though if successful its effort would also affect U.S. imports from Canada and many other countries.

The union’s law firm Monday filed a petition covering raw aluminum imports with a U.S. trade panel. The petition invokes Section 201 of the 1974 Trade Act. The section was last invoked by President George W. Bush in 2001 to start a legal process that led to U.S. tariffs on steel imports the following year.

A Section 201 case covers essentially all imports of a product from all over the world. That makes it more substantial than anti-subsidy and anti-dumping cases against imports from a single country. The European Union objected to Bush’s use of Section 201, which resulted in U.S. tariffs on a wide range of steel products, until the administration dropped them in late 2003.

Difficult case to prove

But Section 201 cases are also harder to win. They require proof that a domestic industry has been “seriously injured” by imports, a harder test than the mere proof of “injury” from imports that is required for other trade cases.

Terence P. Stewart, managing partner of the law firm Stewart and Stewart and the lead lawyer on the aluminum case, contended that raw aluminum could meet the test. “The domestic industry is disappearing before our eyes,” he said. “Quick relief and addressing the underlying imbalance between global supply and demand are essential if we are going to have any industry left.”

The union also argues that aluminum is important to national defense because it is widely used in military equipment.

Section 201 cases are reviewed by the U.S. International Trade Commission, a bipartisan, quasi-judicial group of trade experts in Washington. The commission then makes a recommendation within two to six months to the president, who makes the final decision on whether to impose tariffs. The law allows government officials, industries or unions to file claims.

Presidents have almost always followed the commission’s advice, although President Jimmy Carter turned down a recommendation for tariffs on stainless steel flatware in 1978 and President George H.W. Bush rejected a recommendation for tariffs on extruded rubber threads in 1992. The Office of the U.S. Trade Representative declined to comment on the union’s contentions.

China increases exports

China, which already produces more than half the world’s aluminum, is expanding capacity even as its economy decelerates. The result has been a surge in exports and falling prices for aluminum.

Chinese exports of aluminum jumped more than 27 percent in the past two years, Chinese customs figures show.

A spokesman for the government-affiliated China Aluminum Association, who gave his family name as Zeng, said aluminum’s increasing use in high-speed railway equipment, aerospace and electronics justified China’s expanding production capacity and rising exports.

Smelters in Canada and elsewhere, having been displaced in their traditional international markets, have stepped up shipments of raw aluminum to the United States. U.S. imports of raw aluminum from Canada, the biggest supplier, jumped 10 percent by tonnage last year, U.S. customs data show.

Other factors are influencing the aluminum trade. Alcoa, the main aluminum smelting company in the United States, has announced the closing of a series of smelting operations in the U.S. while relying more on production in Canada, Iceland and Saudi Arabia, as part of what it describes as an effort to improve overall efficiency. In a statement it said, “Alcoa has a long history of cooperation with the U.S. government. We haven’t seen the petition and look forward to reviewing it.”

Exports to the United States are an important source of employment in China, and Chinese officials have been increasingly concerned about Donald Trump’s populist appeals for a tougher trade policy, including a steep tariff on goods from China. Finance minister Lou Jiwei of China told The Wall Street Journal during a visit to Washington in the past week that imposing such a tariff would violate World Trade Organization rules.