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AlCircle China
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Interviews
  • “Now is the time for China to join the community of responsible global aluminum producers to fully and fairly participate in the aluminum market.” Charles Johnson, VP Policy at the Aluminum Association
  • Interviewee
    “Now is the time for China to join the community of responsible global aluminum producers to fully and fairly participate in the aluminum market.” Charles Johnson, VP Policy at the Aluminum Association
    CATEGORY
    Interview
    INTERVIEW DATE
    26/Oct/2016
    SOURCE
    AlCircle.com
    EDITED BY
    Beethika Biswas
    DETAIL

    On September 29, 2016, Garney Scott, President & CEO of Scepter, Inc. and Chairman of the Aluminum Association, as well as Heidi Brock, President and CEO of the Aluminum Association testified at the U.S. International Trade Commission (USITC) public hearing on the Investigation on the Competitive Conditions Affecting the U.S. Aluminum Industry. They both drew attention to the challenges faced by the domestic aluminum industry due to flooding of Chinese aluminum in the U.S. market and urged the USITC to investigate the issue of unfair trading by China.

    Charles Johnson, the Vice President of Policy at the Aluminum Association answered to AlCircle’s queries regarding the overcapacity issue and the public hearing. Mr. Johnson, during his nearly 20-years tenure at the Aluminum Association has undertaken a number of responsibilities like federal affairs, environmental regulation, community and consumer protection, international regulation, and sustainability. Here is an excerpt from the interview:

    AlCircle: What is the current status of the ITC’s investigation into the charge of unfair trade practice registered against China?

    Mr. Johnson: The U.S. International Trade Commission (USITC) is conducting what is called a 332 investigation (named after Section 332 of the U.S. Tariff Act of 1930) into the state of the domestic and global aluminum industry. The investigation was initiated in the spring at the request of U.S. producers by the United States Congress (House Ways & Means Committee).  The study -- slated to be released in the middle of 2017 -- puts the force and resources of the U.S. government behind looking into the challenges currently facing our domestic producers. While the final report will not make specific policy recommendations, it will provide us with an independent, credible analysis and body of research on competitive factors impacting the industry. We hope the 332 investigation can help drive us to our ultimate goal – a negotiated agreement between the U.S. and Chinese governments on the issue of aluminum overcapacity which is depressing global markets today.

    AlCircle: What is your feedback on the hearing that took place in Washington, D.C in front of the International Trade Commission?

    Mr. Johnson: The hearing in front of the USITC in late September was an important step in that agency’s 332 investigation process. More than three dozen stakeholders from across the global industry – elected officials, company executives, trade association representatives, analysts, labor and others – testified for a full-day, standing-room only session in front of the Commissioners. We were incredibly pleased with the level of turnout and engagement and think that it demonstrated just how important tackling the issue of Chinese overcapacity is to the entire industry. 

     News

    AlCircle: Which are the companies and associations that testified during the hearing?

    Mr. Johnson: You can see the complete list of witnesses at the USITC’s website. Senator Joe Manchin III (D-WV) and Damien Levie, Trade Counsellor for the Delegation of the European Union kicked things off. In addition to our President & CEO Heidi Brock and our Chairman Garney Scott, the USITC also heard from Aluminum Association member companies including Alcoa, Constellium, Hydro, Jupiter, Novelis and UC Rusal. Delegations from the Aluminium Association of Canada, European Aluminum Association and the China Nonferrous Metals Industry Association also participated. Again, the showing demonstrated the depth and breadth of interest in this issue from the global industry.

    AlCircle: Are the issues of tax evasion and indirect shipping through Mexico and Vietnam important from a defence perspective?

    Mr. Johnson: We are very concerned that the issue of overcapacity is driving perverse incentives for some producers to engage in questionable and in some cases illegal trade practices like evading duties and trans-shipping metal through third countries. The Chinese tax system discourages the export of primary aluminum through an export duty of 15 percent. At the same time, it encourages the export of these fake-semis through a value-added tax rebate of 13-17 percent. And as the Wall Street Journal recently reported, there seem to be huge inventories of aluminum moving around the globe. According to China Customs data, Chinese exports of aluminum semi-fabricated products totaled 7 billion pounds in 2015, a 20 percent increase over the 2014 level. We know, simply by looking at aluminum for sale on Alibaba, that much of this export, perhaps even most of it, is not really semi-fabricated product in the commercial sense. Rather it is primary aluminum in disguise – a fake semi.

    AlCircle: What is the Association’s present stand on the unfair trade practice issue and how is it planning to move further in that direction?

    Mr. Johnson: Our position is really simple – we want a level global trading playing field where everyone is playing by the same set of rules. The reality is the aluminum industry is extremely integrated globally and that’s been the case for decades. North American producers are very comfortable competing in a global marketplace. But, what we can’t do – and what we won’t do any longer – is compete directly with a foreign government and with producers who don’t play by the same set of rules. Now is the time for China to join the community of responsible global aluminum producers to fully and fairly participate in the aluminum market.

    AlCircle: Shifting focus from the China issue, do you see a turnaround in the U.S. market as the LME aluminium price and the premiums are slowly showing signs of settling down.

    Mr. Johnson: Despite the clear challenges this industry faces today, at a high level we feel very good about the trajectory of this industry. We’ve seen 6 straight years of demand growth in North America and are approaching record shipment levels we haven’t seen since our record-setting years in the mid-2000s. In the spring of this year, the Aluminum Association released a U.S. industry economic impact study which found that, despite a near 60 percent drop in upstream/primary industry jobs between 2013 and 2016, our total jobs number was actually up slightly and our direct impact on the economy was up 15 percent. And, with continued double digit demand growth in the transportation sector, our member companies have invested or committed to invest more than $2.6 billion in U.S. plant expansions over the past 3 years. So, again, we remain pretty bullish about this industry’s future – we just need to get this global overcapacity situation under control.

    AlCircle: The demand scenario in U.S. is encouraging and stable as apparent from Alcoa’s recently released result. Do you think the Association should shift focus to the development of a competitive value added segment in US instead of imposing trade restrictions?

    Mr. Johnson: The U.S. industry – not to mention the Association -- absolutely remains focused on capturing the demand we are seeing today. Innovative companies are increasingly turning to engineered aluminum solutions to make good products great and great products even better -- from more fuel efficient vehicles to sustainable packaging to green buildings. But, we also want to make sure that we don’t lose this generationally historic opportunity to grow. And that’s why it’s so critical that we get the global trade issue right.

    Disclaimer: “The information presented herein is neither intended nor implied to be a substitute for professional advice. The views and opinions shared in the interview section of www.alcircle.com are unique to the interviewees and do not necessarily reflect the viewpoint of www.alcircle.com.” 

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