Month: January 2018

WASHINGTON (Reuters) – The U.S. Commerce Department has sent President Donald Trump the results of its national security probe into aluminum imports, Trump administration officials said on Sunday, while declining to disclose details.

White House spokeswoman Lindsay Walters confirmed that the findings in the “Section 232” probe were delivered on Friday, just before many government agencies shut down due to the lack of a government funding deal in Congress.

Another administration official said an announcement regarding the submission was expected on Sunday, but that it would look similar to the one that accompanied a Jan. 11 submission on a parallel probe into steel imports.

That announcement did not divulge whether the Commerce Department found that steel imports pose a threat to national security, nor whether it recommended Trump impose broad new tariffs or quotas on imports to protect domestic producers.

Trump has promised he would take action to protect steel and aluminum workers from imports, especially in the face of Chinese overcapacity in both metals.

But the question of whether to order broad tariffs or quotas on steel and aluminum has been the subject of intense debate in the White House, pitting officials who favor more aggressive restrictions against pro-business factions who favor a more cautious approach to avoid a run-up in prices of the metals or disruptions to U.S. allies that produce them.

“We look forward to swift and decisive action by the President on this issue in order to save the American aluminum industry,” Century Aluminum (CENX.O) said in a statement on Sunday night. “American producers need comprehensive relief against excess capacity from all state supported enterprises — not just China — to create a fair playing field.”

Critics say using national security to erect steel and aluminum tariffs could trigger a trade war with China, undermine the global rules-based trading system and hurt America’s friends more than China, as well as damage global growth prospects.

HAWESVILLE, Ky. – America’s aluminum industry is imperiled by foreign competition, but Gov. Matt Bevin indicated Thursday he believes President Donald Trump can help save — and even boost — jobs for Kentuckians in that sector.

Trump’s administration launched an investigation last year into the effect aluminum imports have on national security. The results could prompt the president to order protectionist measures in an attempt to support domestic companies like Century Aluminum Co. in Hawesville.

“This is about real families,” Bevin said of the workers employed at Century Aluminum, which operates two aluminum smelters in Kentucky. “It isn’t just a company. It isn’t just a smokestack.”

High-strength aluminum alloys are used in making military aircraft, and aluminum armor plate can help protect against explosives, U.S. Commerce Secretary Wilbur Ross said in April, when the administration initiated its aluminum investigation.

However, America’s ability to produce this metal is shrinking. Aluminum imports to the U.S. rose 18 percent (and domestic production declined) in 2016 compared to 2015, while employment in America’s aluminum industry dropped nearly 13 percent, according to a federal fact sheet.

The U.S. Commerce Department must deliver a report on its aluminum investigation to Trump by Jan. 22, after which the president has 90 days to determine what, if any, actions to take.

Bevin expressed confidence Thursday in Trump’s willingness to intervene and help the nation’s struggling aluminum producers, which he said would have “an immediate and powerful impact” on communities like Hawesville in terms of job creation.

“The president genuinely cares about American workers,” he said, noting that he thinks Trump’s forthcoming decision could determine the survival of the industry.

The administration said last April that the U.S. aluminum industry’s profits are suppressed by artificially low prices, which have been caused by unfairly traded imports and excess capacity internationally.

Only five aluminum smelters are still operating in the U.S., Century Aluminum CEO Mike Bless said. If Trump takes action to protect the industry, his company plans to quickly increase production and hire dozens of new workers.

“There’s not many jobs out here like this,” Coy Zuelly, 46, who has worked for Century Aluminum for over a decade, told the governor Thursday. “If you don’t have these jobs, your community suffers tremendously.”

Several other employees who were part of a roundtable chat with the governor have family serving in the military, and they told him they’d feel safer knowing their loved ones are being protected by high-quality, American-made equipment overseas.

The Aluminum Association in Washington, D.C., considers Chinese overcapacity as the aluminum market’s fundamental problem, said Matt Meenan, senior director of public affairs.

The association would like to see Trump enact a remedy that focuses on China, Meenan said, and would support establishing a federal monitoring system that tracks the route aluminum imports take to the U.S.

A panel of advocates for the aluminum production industry on Wednesday urged President Donald Trump to expedite action around a U.S. Commerce Department investigation that began in April.

Results of the investigation are due as early as next week as the U.S. aluminum industry wrestles with a steep downturn in capacity instigated by what it calls unfair subsidies of producers in China, Russia, India and the Middle East.

“I’ll put this bluntly,” Century Aluminum CEO Mike Bless said at a press conference in Washington, D.C. organized by the China Trade Taskforce. “We cannot survive much longer if we don’t act.”

Century is the only U.S. maker of high purity aluminum, which is used extensively in military fighter jets, vehicles and vessels.

Bless noted that whereas there were once 23 primary aluminum smelters in the U.S., only five remain, and only two are operating at full capacity. Bless and other speakers said the degradation of U.S. production is due to rapid and extreme overcapacity by state-owned enterprises abroad. Those subsidized producers use predatory pricing to drive down rates for aluminum, which is a global commodity subject to extreme volatility.

The so-called Section 232 investigation, part of the 1962 Trade Expansion Act, has been carried out by the Commerce Department, which will consider overcapacity, dumping, illegal subsidies, and other factors to determine whether aluminum imports threaten American economic security and military preparedness.

If threats to national security are found during the investigation, Section 232 gives the president broad powers to adjust aluminum imports, including through the use of tariffs.

Bless said foreign producers receive subsidies on energy (the highest input cost in the production of aluminum) and financing, while private U.S. producers receive no similar benefits.

Tom Conway, vice president of the United Steelworkers Union, said time is of the essence in terms of the need for action to be taken by the Trump administration. He said 8,000 of his members have lost jobs related to aluminum production due to subsidies that foreign producers receive.

“We’ve been on the frontline of trade battles for a long time,” Conway said. “We’ve participated in more trade cases than any other entity. And we’ve felt the brunt of trade cases through lost jobs. By the time a trade case makes its way through the process, we’ve lost already. The current process we have doesn’t work. The deck is stacked against us. Our companies aren’t competing against other companies, they’re competing against other countries.”

Conway pointed to comments from Commerce Secretary Wilbur Ross that the aluminum issue was a pressing issue when the 232 investigation was instigated.

“The administration promised a reaction and that it’d be quick,” he said. “It’s nine months on, and our members can’t understand why this has dragged on if it’s a crisis. They were told to wait for health care and the tax bill.”

(Ret.) Brigadier Gen. John Adams, now a defense consultant, and former U.S. Speaker of the House Newt Gingrich (who participated in the conference via video from Rome), hammered home the importance of retaining domestic production of high-grade aluminum for U.S. defense.

Adams said the military needs to have unfettered access to the production of a critical component, and that relying on supply chains that touch potential adversaries like China and Russia is dangerous.

“We must not abet China by not remaining complacent in meeting this challenge,” he said.

Gingrich focused on the idea that the aluminum case could serve as a bulwark for a broader redefinition of the protection of the U.S. military industrial base, suggesting that government enact trade policies that take into account these critical sectors. He said decisions around dumping and countervailing duties, or when trading partners are not acting in good faith, need to be made in a more agile manner.

Every speaker spoke to the fragility of the industry, with Bless putting a fine point on its vulnerability.
“In the fall of 2015, there was a time when all U.S. production was going to end for primary aluminum production due to price reduction on global market,” he said. “We’re talking about this industry ending in a matter of months.”

None of the speakers advocated for a ban on imports, but most suggested targeted actions that would raise the price of aluminum imports and help the industry recover its footing.

There is some pushback domestically against any import actions, primarily from downstream industries that rely on aluminum as an input, and are wary of seeing those costs rise.

As a brigadier general with a 30-year career in the U.S. Army, national security is my number one concern. On 9/11, while serving at the Pentagon as deputy director for european policy in the Office of the Secretary of Defense, I participated in immediate disaster recovery operations at ground zero and saw firsthand the threats posed to U.S. national security interests by countries that don’t share American values.

In recent years, I authored a study on the military’s growing and dangerous reliance on foreign nations for the raw materials, parts and finished products needed to defend the United States. Among the materials that I studied were alumina and bauxite, concluding that America’s growing reliance on imports of these and other materials is a threat to U.S. national security. I also participated in the U.S. Department of Commerce’s Section 232 investigation into aluminum imports and the need to ensure that the U.S. aluminum industry remains viable to support the nation’s national security needs.

Today, the 50th Speaker of the U.S. House of Representatives, Newt Gingrich, members of Congress, union leaders and I gathered to discuss this clear and present danger to U.S. national security. The current state of the domestic primary aluminum industry is simply unsustainable from a national security perspective. In the Middle East, Russia, and Asian countries both inside and outside of China, the governments have stepped in to illegally subsidize their own domestic aluminum producers.
Since 2009, during a period in which global aluminum prices have come under pressure, state-owned smelters outside of China in the Middle East, Russia and Asia added 17 million metric tons of new capacity. During that same period time, our aluminum industry has played by the rules and that has resulted in a nearly 60 percent reduction in U.S. primary aluminum capacity and in the loss of more than 4,000 American jobs.

Aside from the significant numbers of jobs lost, U.S. producers of finished products that are directly used in U.S. military and critical infrastructure are becoming increasingly dependent on imports. High-purity, American-made aluminum is used in defense platforms including F-35, F-18 and F-16 fighter jets and other military aircraft, littoral combat ships, armor for the light tactical vehicle program, tank hulls, missile structures and more. Yet, this vital material is only produced in one remaining smelter in the United States, producing at only 40 percent capacity and under great economic pressure to compete with Chinese dumping. U.S. primary aluminum producers have lost nearly 100 percent of their high-purity sales to suppliers in Russia and the Middle East.

In April 2017, President Trump and his administration announced the Section 232 investigation, leaving hope for impactful policy change. This little-known provision, carried out under Section 232 of the 1962 Trade Expansion Act, would allow President Trump to “adjust imports” that threaten to undermine national security. The U.S. Department of Commerce is soon expected to take the next steps forward as part of the long-awaited Section 232 investigation into the national security threat of aluminum imports. Following on from this, President Trump will have 90 days to decide a course of action based on Secretary Wilbur Ross’s recommendations, a decision that could save the jobs of thousands of aluminum workers.

I urge President Trump to take immediate action on this issue and impose meaningful relief for America’s aluminum industry. Global overcapacity threatens America’s ability to protect the homeland and develop weapons and military technology that keeps us safe. We can no longer delay safeguarding these critical industries and we must act now. America’s industry will not survive the time it takes to coordinate and develop a multinational response. Significant comprehensive relief across all aluminum imports is needed to restart idled production for the approximately 70 percent of U.S. smelters that have been forced to close their doors in the past decade.

It’s an issue that transcends party lines. Illegally-subsidized foreign aluminum is distorting global pricing and flooding American marketplaces, driving down domestic prices, depleting production, and forcing manufacturing facilities across the nation to close their doors. Relief is needed and needed soon to ensure that this historic and vital American industry can stay afloat. Relief against China alone won’t revitalize the industry.

The collapse in the price of primary aluminum is due to rampant global overcapacity inside and outside of China driven principally by government subsidization of state-owned-enterprises. State-owned smelters outside of China are equally distortive as the highly-distorted Chinese smelters. Market-based players in the United States are forced to bear the brunt of these government interventions in the market.

Imagine a world where we are 100 percent dependent on China, the United Arab Emirates and Russia to equip our armed forces and build critical infrastructure. We need broad and effective relief to protect thousands of American jobs and ensure that the U.S. primary aluminum industry will continue to play a vital role in U.S. national security. Now is the time for decisive action. The U.S. military, along with communities across the country, are anxiously awaiting President Trump’s Section 232 decision on aluminum as we work together to keep America safe.

Brigadier General John Adams retired from the U.S. Army in 2007. His final assignment was as deputy U.S. military representative to the North Atlantic Treaty Organization military committee. He is the author of “Remaking American Security” and the president of Guardian Six Consulting.