Jan 19

Goetz Fitzpatrick Participates in U.S. Government National Security Investigation on Aluminum Imports

Attorney Donald R. Dinan on behalf of major aluminum fabricators and extruders in the United States recently participated in the national security investigation being conducted by the United States Department of Commerce (“DOC”) of imports of aluminum into the United States.

The investigation, initiated by Order of the President, was being conducted by the Bureau of Industry and Security at the DOC, pursuant to section 232 of the Trade Expansion Act of 1962. The Department was particularly interested in whether the quantity of or other circumstances relating to the importation of aluminum was adversely affecting national security by reducing domestic production and production capacity below what is needed for aluminum to meet projected national defense requirements. The United States has lost over 70 percent of its smelting capacity in the last 10 years. Only one smelter in America, Century Aluminum Co., is still operating that makes defense grade aluminum used by the Army, Navy and Air Force. The focus of the investigation is China which has been accused of subsidizing over-production of aluminum and dumping it on the world market, driving prices below the level at which smelters in other countries, particularly the United States, can operate profitably, thus causing them to shut down plants.

Mr. Dinan of Goetz Fitzpatrick prepared testimony for the industry that emphasized the critical need of maintaining capacity and supply of high purity prime aluminum for defense and for downstream producers. It is essential for the health of the United States aluminum fabricators that they have access to high quality prime aluminum from Canada and the United Arab Emirates (“UAE”), as well as United States smelters, including Century, to ensure an adequate supply of 1000 and 3000 series [high purity] aluminum at internationally competitive prices.

In the comments prepared by Mr. Dinan, he emphasized the economic pressure on the United States prime producers, including Century, was being caused by China and China alone. Any trade remedial action must be tailored so that it affects China and not our close trading partners and allies. World demand for aluminum is flat. China, however, has increased production over 50 percent in the last 5 years. China is adding a smelter a month to production. China is literally making aluminum for which there is no market and no demand outside of China. It is this predatory behavior that is putting United States smelters out of business.

Based on these facts, Mr. Dinan urged that any section 232 relief must be carefully crafted to affect China alone. He submitted that this can be done and be consistent with our World Trade Organization (“WTO”) obligations under Article XXI of the GATT, National “Security Exceptions,” which provides relief from the obligations of the other Articles of the GATT, including Article I, “Most-Favored-Nation Treatment.”

The Department has prepared its confidential report for the President which contains the recommendations of whether there should be quantitative restrictions, increased tariffs imposed, or other trade action taken. Once the President decides, he has 30-days under the statute to take action and impose any import restrictions.

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