The United States filed a new trade enforcement complaint against China at the World Trade Organization (WTO), alleging the country is skirting WTO rules by providing subsidies to certain producers of primary aluminum.
The Obama Administration announced Thursday it took the action to address U.S. concerns that China’s subsidies are artificially expanding Chinese capacity, production and market share and causing a significant decrease in the global price for primary aluminum.
“Artificially cheap loans from banks and low-priced inputs for Chinese aluminum are contributing to excess capacity and undercutting American workers and businesses,” U.S. Trade Representative (USTR) Michael Froman said in a statement. “[Thursday’s] action follows significant engagement by this administration on excess capacity and demonstrates our commitment to hold China to its trade obligations.
According to the USTR’s office, the country’s apparent subsidies raise concerns that China is not acting consistently with its obligations under the WTO Agreement on Subsidies and Countervailing Measures.
China’s Commerce Ministry said in a statement Friday the U.S. complaint “lacked a factual basis,” Reuters reported. “China’s aluminum market is a highly competitive and marketized industry,” it said. “Relevant loans and raw material purchases are all fully marketized and commercial. The so-called subsidy problem claimed by the United States does not exist.”
The USTR office claims that from 2007-2015, Chinese primary aluminum production increased by approximately 154 percent and capacity increased by approximately 243 percent, while global prices fell by approximately 46 percent. It notes that during the same period, U.S. primary aluminum production decreased by approximately 37 percent and capacity decreased by approximately 46 percent, even though overall U.S. consumption increased. The number of U.S. aluminum smelters fell from 14 in 2011 to five in 2016, with only one operating at full capacity.
“China’s subsidies have had and are continuing to have a significant adverse impact on the U.S. domestic aluminum industry, and ultimately are harmful to American jobs, workers and business,” said Aluminum Extruders Council (AEC) chairperson Matt McMahon. “The USTR’s action is an important first step toward addressing, and correcting, China’s policies on aluminum.”
This is the 16th time the Obama Administration has taken action against China at the WTO.