EC hasty in placing deadline on aluminium duty cut proposal vote

The European Commission's proposal for a two-phase cut to the European Union's 6% unwrought aluminium import duty is still a work in progress and the commission may have been hasty in suggesting a date for proposal to be passed, an EC spokesman told Platts Thursday.

"Basically internal commission discussions are still ongoing and we can't say when we will formally table the proposal," said Peter Power, spokesman for EU trade commissioner Peter Mandelson. Power said he had initially pinpointed December 12 as the deadline for internal consultation on the duty proposal and said further that the completed paper would be put before the Council of Ministers for a vote by December 20, the council's last meeting of the year.

But, Thursday he backtracked telling Platts that he should not have mentioned any dates as the EC still did not know when the proposal would be tabled and admitted that it was still a work in progress. "But we hope to table the proposal by the end of December," he said, suggesting that the EC was still optimistic that the duty cut would be in place from January.

The proposal the EC is working on involves a initial cut to 3% from 6% in January and a subsequent reduction to zero in 2009. However, if the legislation is not ready for January, market participants might be able to claim back the duty retroactively.

A source close to the EC said the aluminium duty issue was not yet on the agenda for any meetings before the end of the year, but said the proposal was expected to be finished in the next week or so. "We hope that it will be passed by December," he said. The source said that while most of the eastern European countries were pushing for the duty cut, others like Germany, France, Spain and the Netherlands might be opposed to the cut. "Some of those opposed have primary smelters on their territory and it suits them the way it is," the source said.

The EC's statements about the duty cut have wreaked havoc in the European physical market, bringing contract talks to a standstill--at a time when market participants would ordinarily be looking to wrap up their deals for the following year. Premiums for duty-paid Good Western material are also at extraordinary highs around $190-220/mt plus LME cash on an in-warehouse Rotterdam basis.