Earlier this week aluminium trade group European Aluminium petitioned the European Commission to take the next step after issuing a white paper on the negative effects of subsidized imports to the continent by taking concrete actions against importers from the People’s Republic of China.
In a press release issued on Wednesday, European Aluminium noted the immense pressure aluminium manufacturers are under in Europe due to subsidized imports from China. Not only have subsidies flooded the world aluminium market with below-market priced aluminium, European Aluminium notes that the subsidies have led to massive overcapacity and a troubling amount of carbon release.
“A new instrument on foreign subsidiesis long overdue to complement existing trade tools such as the EU Foreign Direct Investment screening mechanism and trade defence instruments,” opined EA’s director general Gerd Götz.
“The EU’s current trade toolbox is far from adequate to defend European industries against the aggressive approach of global powers such as China. The EU needs a more ambitious trade policy to level the global playing field, facilitate supply chain diversification within the EU, and reinforce our defence against unfair trade practices.”
According to the EC’s report, aluminium smelters have been subsidized to the tune of up to US$70 billion, with the vast majority of it given to Chinese aluminium smelters. The direct result of such an arrangement has been a significant increase in China’s share of the aluminium production market, raising it from 11 percent in 2004 to 57 percent today.
“The White Paper suggests measures which go in the right direction, but their effectiveness will depend on the EU Commission’s services dedicating enough resources so that these measures can be implemented at the beginning of next year. The aluminium industry cannot afford to wait much longer.”
As a result, EA says Chinese producers are flooding the European market, undermining the continent’s aluminium producers and threatening the future of aluminium production in Europe as a whole.
“The COVID-19 crisis has highlighted the importance of reinforcing Europe’s strategic autonomy in essential materials such as aluminium by strengthening trade defence instruments against unfair global competition.”
“Global competition, especially from China, will ramp-up fiercely in the post-COVID-19 world” noted Götz. The Chinese aluminium industry has already built up massive volumes and is capable of entirely replacing the European aluminium industry if the EU does not act assertively.”