EU “sacrificing aluminum value chain” in EU-US metal tariff deal, warn industry associations
04 Nov 2021 --- US and EU aluminum associations are “very concerned” the recent agreement to renegotiate transatlantic metal tariffs could result in “even more trade distortion and additional market instability.”
European Aluminium and its US counterpart The Aluminum Association have long spoken out against quotas imposed under the Trump presidency, when a 25% import tax on steel and a 10% import tax on aluminum were introduced. In retaliation, the EU imposed a range of taxes on products from whiskey to motorcycles.
The recent announcement the new administrations would enter into tariff renegotiations is sparking fear for industry stakeholders that a new set of tariffs will merely continue the current dynamic, which limits trade volumes.
Speaking to PackagingInsights, Kelly Roegies, European Aluminium’s communications manager, states: “We would like to see a complete removal of the Section 232 tariffs and the tariff-rate quota system.”
The trouble with China
A central concern over a refreshed tariff system is the US-EU relationship will not be strong enough to combat China’s monopoly on steel and aluminum. President Biden used the G20 Rome summit, where the tariff renegotiation agreements were announced, to label Chinese production environmentally “dirty” and accuse it of illegal dumping practices.
Aluminum F&B manufacturers face market turbulence as US-EU tariffs are renegotiated.“European aluminum producers already face tremendous competitiveness challenges because of the high regulatory costs in the EU and unfair competition from China,” says Gerd Götz, director general of European Aluminium.
“Yet despite our industry’s precarious situation, the EU suspended long overdue anti-dumping measures on dumped Chinese flat-rolled products, depriving us of the level of trade defense protection US companies enjoy.”
The European Commission (EC) recently suspended a final decision on anti-dumping duties, which would prevent manufacturers from purchasing cheap Chinese flat-rolled aluminum.
“It now deals us another blow in the space of a month. The EU is sacrificing the entire aluminum value chain like never before to appease a handful of downstream users and traders,” adds Götz.
PackagingInsights is awaiting comment from an EC spokesperson on the issue.
Decarbonizing aluminum
Despite concern over removing the tariffs, both associations say they welcome increased cooperation to combat energy-intensive production practices.
Aluminum production accounts for roughly 2% of global carbon emissions, according to Roegies. However, the use of iron and coking coal makes Chinese aluminum far more polluting, she says.
The carbon footprint of European primary aluminum production is one of the lowest globally. There is approximately 7 kg of CO2 per kg of aluminum compared to a global average of 17 kg of CO2 and a Chinese average of 20 kg of CO2.
The ongoing magnesium crisis has not been in addressed in the new agreement discussions.
Roegies says European Aluminium wishes for increased cooperation from China on the issue.
“We hope China will cooperate with other major markets to address its subsidized capacity and unfair trade practices stemming from it. However, China has not expressed its intention to be part of the Global Arrangement yet.”
The Chinese government hit back at President Biden’s remarks on “dirty” imports, calling them “groundless.”
Magnesium issues
A recent boom in magnesium prices, which has created a critical shortage of the material throughout Europe, is compounding trade issues for metal packagers.
Magnesium is an essential alloy for the strengthening, malleability and resistance of aluminum. Without it, F&B packagers have no room to adapt, which Roegies warns could halt production altogether and be catastrophic for the EU economy.
“Judging from the available public information, it seems the magnesium issue will not be addressed in the Global Arrangement on Sustainable Steel and Aluminium,” she concludes.
By Louis Gore-Langton
