United States Challenges China’s Aluminum Subsidies at the WTO

On January 12, the United States filed a request for consultations at the World Trade Organization (WTO) regarding the substantial subsidies that the Chinese government has been pouring into its primary aluminum industry from 2007 to the present. The United States mainly complains about China’s provision of loans and other financing to primary aluminum producers at low interest rates through banks and the provision of coal, alumina, and electricity to one large producer for less than adequate remuneration. The United States alleges that the Chinese subsidies appear to be causing adverse effects to the interests of the United States. According to the request, primary aluminum refers to “aluminum produced through the electrolytic reduction of alumina” and is “also known as electrolytic aluminum.”

According to the United Steelworkers (USW), USW and a U.S. primary aluminum producer Century Aluminum Company (CENX) were the parties from the U.S. aluminum industry backing this filing. More than one year ago, USW and CENX initiated a cooperative effort with the United States Trade Representative (USTR) to address the global overcapacity problem, especially massive expansion and significant overcapacity in China’s aluminum sector. USW complained that China’s massive expansion and overcapacity caused unfair market price for U.S. aluminum products and thus serious injury to the U.S. aluminum industry, which had to close numerous facilities and lay off more than 6,600 skilled USW member workers.

An official of the Ministry of Commerce of China (MOFCOM) commented on the filing on January 13, denying the existence of the alleged subsidy programs. The official asserted that the Chinese aluminum market is a highly competitive market, and the loans and raw materials are sufficiently marketized and commercialized. The official also said that overcapacity is a global problem arising from the sluggish world economy, which needs a cooperative effort by all countries to resolve.

Filing a request for consultations is the formal first step to start a dispute at the Dispute Settlement Body of the WTO. The complaining party and the responding party have 60 days to discuss the dispute with each other to find a mutually satisfactory solution. If the parties cannot reach a satisfactory solution within the 60-day consultations stage, the complaining party may request to establish a panel to continue the litigation process.