Joe Biden’s arrival to White House signals diplomatic breakthrough to EU-US ties; European Aluminium applaud discussions on aluminium excess capacity

The voice of the aluminium industry in Europe with 80+ members, European Aluminium welcomes the news that the EU and US have agreed to enter into discussions on the mutual resolution of aluminium excess capacity and the deployment of effective solutions. The industry association calls on the US and EU to eliminate the trade barriers between the two regions and show leadership in modernising multilateral trade rules.

Gerd Götz, Director General of European Aluminium, said: “We welcome the news that the EU and US are entering discussions to chart a path that ends the WTO disputes following the implementation of the Section 232 tariffs. We hope the two parties will eventually eliminate unilateral measures and not introduce new ones that inevitably hinder free and fair trade between our strongly interlinked transatlantic value chains. Rather than slapping tariffs on each other, the US and EU should work together to address the root cause of the challenges faced by the aluminium industries on both sides of the Atlantic, namely the growing subsidised excess capacity of aluminium in China.”

China has been manufacturing surplus capacity of aluminium for years and this, incorporated with China’s lower internal demand for aluminium, has oversupplied the world market with cheap, carbon-intensive aluminium.

The Chinese government’s abundant support in the form of financial and energy subsidies is at the heart of its increasing excess capacity. However, an OECD report released last week shows that below-market finance has been found to play a major role in favouring certain aluminium producers, the vast majority being Chinese. The OECD estimates the value of China’s support to have ranged between 4% and 7% of the annual revenue of these firms. This is in stark contrast to non- Chinese firms in the sample, which received support in the vicinity of 0.2% of their annual revenue.

“The OECD findings underscore the need for better rules governing below-market finance and government support more generally. The current WTO rules fail to discipline China’s trade-distorting government support and state ownership in industrial sectors like aluminium. The EU, US and fellow G7 members should take concrete steps to level the playing field during the G7 summit in June,” concludes Götz.