US countervailing duties shut out Chinese aluminum

The U.S. Commerce Department recently announced the preliminary decision of the countervailing investigation on Chinese aluminum extruded products, which will slap a punitive tariff of nearly 138 percent on goods from three major Chinese aluminum products exporters, including China Zhongwang Holdings, Limited.

The 21st Century Business Herald quoted a senior executive from a Chinese aluminum enterprise, who declined to be named, as saying, "The high tariff of nearly 138 percent is enough to force most Chinese aluminum companies out of the U.S. market."

What is worse, the preliminary decision of the anti-dumping investigation on Chinese aluminum products may be announced on Oct. 27, and the final decision of the countervailing investigation will be made on Nov. 21. By then, the punitive tariff on imports of aluminum products from China will be the sum of the anti-dumping and countervailing duties.

According to statistics from the U.S. government, the imports of aluminum extruded products from China to the United States increased by 90 percent from 2007 to 2009, and the value of imports reached 514 million U.S. dollars in 2009. In addition, the share of Chinese aluminum extruded products in the U.S. market reached over 20 percent the same year.

The anti-dumping and countervailing investigations were launched at the request of the U.S. Aluminum Extrusions Fair Trade Committee and the United Steelworkers Union who alleged that China subsidizes aluminum exports to the United States by undervaluing its currency.

The U.S. Commerce Department conducted a hearing concerning the countervailing investigation in June, and a few Chinese aluminum companies were chosen and asked to attend the hearing. However, three of them including China Zhongwang and Miland Luck did not go.

"It is inconsistent with the rule of law and also the most controversial part of the investigation to compulsively levy a countervailing duty of nearly 138 percent on Chinese goods when three of the selected Chinese aluminum exporters did not attend the hearing," stressed Peng Min, an attorney at the Shanghai Huangshan Law Firm.

After the U.S. Commerce Department makes its final decision, Chinese aluminum companies can appeal to the U.S. Court of International Trade, which may force the commerce department to change its ruling. If the United States levies both anti-dumping and countervailing duties on Chinese aluminum products, China's more than 100 aluminum companies will suffer great losses in terms of exports.

After Canada officially imposed the two duties on Chinese aluminum extruded products in August 2008, Guangdong province, China's aluminum extrusions production base, witnessed a decline of nearly 65 percent in its exports of aluminum extrusions to Canada in 2009. In addition, Australia launched anti-dumping and countervailing investigations into Chinese aluminum extruded products in June 2009, and Guangdong's total exports of aluminum extrusions dropped by nearly 25 percent in the same year.