Global Aluminium Trade Groups Call On G7 To Rein In Chinese Subsidies

Global Aluminium Trade Groups Call On G7 To Rein In Chinese Subsidies

Last week the Aluminum Association, European Aluminium, the Aluminium Association of Canada, and the Japan Aluminium Association came together to release Towards a Fairer and Cleaner Trade in Aluminium, a policymaker briefing that details the manifest harm exacted by state subsidies of aluminium production by the People’s Republic of China to the global economy and environment. The aluminium trade group consortium shared the briefing with trade officials in all of the G7 states, specifically Canada, France, Germany, Italy, Japan, the United Kingdom, and the United States

Per the briefing, data from the Organization for Economic Co-operation and Development (OECD) indicates that China’s share of the aluminium production market has grown from a tenth at the turn of the century to almost 60 percent today. The briefing says that Chinese companies receive between 4 and 7 percent of their annual revenues via state subsidies compared to the global average for major aluminium firms of 0.2 percent.

In addition to the economic damage, the briefing says Chinese subsidies render significant environmental damage, as the subsidies tend to encourage aluminium operations that put off greenhouse gases instead of more advanced refining and smelting technology that is significantly cleaner. Per the briefing around 88 percent of China’s aluminium capacity is coal powered, which produces ten times the amount of carbon dioxide as hydro-powered aluminium production.

Charles Johnson, president and CEO of the Aluminum Association, said non-Chinese firms will depend upon significant pushback against subsidies in order to grow and thrive in the global market.

“With continued demand growth and U.S. investment totaling $4 billion in the over the past decade, American aluminum has an enormous opportunity to thrive in the 2020s and beyond. But, meeting our full potential will require smart policy to combat massive state subsidies that distort global supply chains and slow down the industry’s push to decarbonize. Aluminum firms everywhere – not just state-owned enterprises – should benefit from demand that is expected to grow 80% globally by 2050.”

Paul Voss, Director General of European Aluminium, said China’s practices hindered environmental progress on the continent.

“Unfair trade practices erode the tremendous economic and social benefits domestic value chains crucial to the achievement of the European Green Deal bring and accelerate an alarming trend Europe has been facing over the past years: an increasing import dependency on high-carbon products that do not meet Europe’s sustainability standards.”

Jean Simard, President and CEO of the Aluminium Association of Canada, said reining in Chinese subsidies is critical to his country’s efforts at producing low-carbon aluminium.

“Canada’s responsibly produced low CO2 primary metal is the result of massive multibillion-dollar modernization investments, operational efficiency and stringent regulatory environment. As we move ahead, to further our decarbonization, a clear and clean trading level playing field is required in order to avoid subsidized carbon leakage disrupting our North American value chain.”

“In Japan, 2,400 companies operate along the aluminium value chain and support almost 100 thousand jobs”, concluded the executive director of Japan Aluminium Association, Yasushi Noto. “Aluminium is significantly useful to recycle compared with other materials and the industry has the vital role to reduce carbon footprint. To achieve the goal of carbon neutral, we have to prevent the carbon leakage associated with distorted global aluminium value chain.”