All Aboard! Here we Go!

Earlier this summer I suggested we were sitting in the eye of a storm.  With many decisions regarding our trade case on the horizon, we were busily preparing for the industry changing issues we were hurtling to confront.  Now, here we are.

Over the next few months, the AEC will be involved in topics ranging from circumvention of our orders by substituting 6xxx series alloy extrusions with a so-called 5xxx series alloy, to China’s attempt to be recognized as a market economy thus attaining full status at the World Trade Organization.  The good news is that we are ready, and confidence is high.

Many of you have responded to our trade alerts seeking field intelligence about 5xxx series alloy shipments and new shipments coming in from Vietnam.  Both go to the heart of our claims to the U.S. Department of Commerce (DOC) and the U.S. Customs and Border Patrol.  Your reports are fueling the very investigations that will bring these matters to a positive conclusion for us.  Please keep us informed of any new information you may have on these issues.  We can never have enough evidence!
Our ‘base case’ is in excellent shape.  Earlier this summer, the DOC announced its preliminary results of this year’s administrative review.  The good news is that the rates held at 80% for dumping and 26% for countervailing duties.  This combined rate of 106% is the highest duty we’ve seen since the original orders were issued.  The DOC will announce its final results this December.  We expect them to be very close to what they announced in their preliminary decision.  This year, the administrative review process takes a bit of a back seat to the real work in front of us:  our 5-year Sunset Review.
The Sunset Review is officially underway.  Unfortunately, the International Trade Commission did not decide to conduct an expedited review like the DOC did.  As a result, we will be issuing new workbooks out to members in the fall with data requested by the ITC.  We hope that it is not too much more onerous than what we submitted earlier this year, but we will have to wait and see.  This review appears to be largely focused on ‘like product’ arguments.  Basically, this is where a manufacturer petitions the ITC and asks that their product be excluded from our orders because it is a separate and unique product from extrusions.  We had two such challenges in our original filing.  One was about finished heat sinks and the other was about shower and bath enclosure extrusions.  In that hearing, the heat sink folks won their case, but the shower door manufacturers didn’t.  We will have to wait and see who comes forward this time.  The good news is that there does not appear to be any challenge to our base case.  So, we continue to believe our orders will be extended for another five years.  The data is clear.  Without these orders, our industry will suffer irrecoverable damages from an onslaught of Chinese extrusions.

Beyond these industry specific issues, which we will continue to fight, we have an eye on the macro issues impacting our industry.  Much was said during our spring meeting by extruders about the shrinking domestic aluminum primary market.  Concern was loudly expressed that we needed to do whatever we could to help those that are fighting to save the domestic industry.  So, we went to work this spring and summer to align ourselves with those that are pushing for the same goal.  We have done that by joining forces with the Manufacturers for Trade Enforcement, the China Trade Task Force, and the International Fair Trade Alliance.  Over the next few months, the World Trade Organization and governments all over the world will have to make a decision about whether or not to grant China market economy status.  There are two lines converging:  the free world’s push to force China to stop its policies that lead to over-production and China’s demand to be recognized as a market economy.  No two points could be more contradictory.  It seems impossible to us that China can claim it is market based when it continues to flood the world with products for which there is no market.  Therefore, it is important to the AEC that we help in any way we can to broadcast that point.

Because of the many issues we have Alan Price of Wiley Rein as our keynote speaker.  Alan is deeply involved in the WTO case and knows our industry very well.  I know you will find his presentation incredibly informative.  So, don’t forget to register, and when you do, take on that extra day.  On Thursday the 29th we will have our Hill Day and take our message directly to those that will write the laws we need.

See you in D.C.!

Jeff

The Half -Million-Dollar Decision

In the last couple of blog entries I’ve mentioned that we are waiting for the International Trade Commission (ITC) to decide if our Sunset Review will be an expedited or full review.  Last week the ITC decided on a 3-3 vote to conduct a full review.  That not only extends the timeline to close the issue, but will end up costing the AEC upwards of $500,000 in staff and legal fees.  Needless to say, this was a most disappointing decision.

This decision does not cause us to downgrade our chances of winning.  As it was in the original filing, no Chinese extruder has come forward to challenge the base case.  Instead, there a couple of like-product challenges for products that have already been defined as covered in scope requests.  So when considering the size of the Chinese aluminum extrusion industry, having only two minor players come forward with scope issues, the decision by the ITC hurts even more.  While the AEC does have the budget and financing to cover this expense, it would have been nice to use that money elsewhere.  Regardless, we will move forward and our confidence remains high.

The circumvention/scope cases we filed against Zhongwang are underway.  The 5050-series circumvention case is going into its next phase.  We are insisting that the Department of Commerce (DOC) keep its word and send questionnaires out to all suspected importers and exporters of 5050-series aluminum extrusions in order to make a global decision on this scheme.  In the pallet case against Zhongwang, we have submitted our final questionnaire and will push the DOC to see these so-called pallets as nothing more than fabricated extrusions and call them ‘in scope’ and therefore subject to duties.

On the curtain wall front, all sides have issued their comments to the Court and are awaiting the Court’s decision.  One likely outcome is that the case will be heard in the Appellant Court later this year or early 2017. We will continue to monitor this situation.

Over the last few weeks, we’ve received a number of reports regarding Vietnamese extrusions coming into the U.S.  There is a growing concern that these extrusions are Chinese products being transshipped through Vietnam.  So, we’ve sent a Trade Alert out to our membership asking for any anecdotal information about this topic that might be helpful as we investigate.  If you have something to share, please do not hesitate to contact me directly: jhenderson@tso.net, 847-416-7222.

In summary, it’s fair to say that our case appears on the right track.  That is the important thing. While it’s disappointing we didn’t get the decision we wanted at the ITC, it doesn’t impact our chances of victory.  Stay tuned for more updates in the coming weeks.  And again, thank you for your continued support!

Chinese Extrusion Transshipments through Vietnam

In recent months there have been a growing number of reports about aluminum extrusions being imported into the United States from Vietnam.  This recent spike comes at a time when the AEC is watching such reports and import data very carefully.  Given the current policies of the Government of China to export their way out of their self-created overcapacity problems, the AEC is becoming more concerned about the prospect of transshipments from Chinese extruders through Vietnam.

AEC members are asked to contact Jeff Henderson with any reports gathered from the field regarding Vietnamese extrusions coming into the U.S.  All reports will be treated in strict confidence.  It must be determined whether or not there is a pattern in what is being imported.  This pattern could appear in end use markets being targeted, names of the companies exporting product from Vietnam, types of extrusions and finishing, etc.

So, please let Jeff know what you are seeing in the field.  He can be reached at 847.416.7222 or by email at jhenderson@tso.net.

Gathering Storm for the Chinese Aluminum Extrusion Industry

As reported last month, the U.S. aluminum extrusion industry is awaiting the International Trade Commission’s decision on whether to hold a full or expedited review of our five-year-long trade case against the People’s Republic of China (PRC).  In the meantime, aluminum interests across the free world are developing plans and actions to confront the impending request from China to be granted market economy status (MES) by the World Trade Organization (WTO).  Within that debate are issues particularly alarming to aluminum extruders across the globe.

                Related: Granting China Market Economy Status will make the whole world less of a market economy

Global trade data continues to confirm that the Chinese continue to push their over-production into their export businesses, which are flooding the world with unwanted aluminum.  One semi-fabricated form in which we see this aluminum is extrusion.  From warehouses in Southern California to the deserts of Mexico, billions of pounds of aluminum extrusions sit, unsold, and apparently are headed for a re-melt facility.  It continues to be a curious thing to understand how a company can continue to chortle about fantastic profits in their earnings reports when they have shipped billions of pounds of unsold extrusions out of their country without customers.  What then becomes mind-numbing is to learn that this activity has been duplicated in Europe, Australia, and Vietnam (so far).  Well, it appears the global community has seen enough.  Of course, other forms of aluminum are being dumped in markets worldwide as well, but only in extrusion does it appear to be as unsold product.

Three new organizations have formed in recent months that will focus on the aluminum glut being created by China’s over-production.  They are the Manufacturers for Trade Enforcement (MTE), China Trade Task Force (CTTF), and the International Free Trade Alliance (IFTA).  Each has a slightly different agenda, but all believe China must develop production schedules in tune with demand.

According to its website, www.tradeenforcement.org, “Manufacturers for Trade Enforcement is a coalition of leading U.S. industry groups opposed to the automatic granting of market economy status for China at the end of 2016.”  It currently boasts 17 members, including the Aluminum Extruders Council. Its membership extends beyond aluminum and includes many other manufacturing interests including steel, concrete, wire, and textiles.  This is a similar strategy that was taken in Europe where the European Aluminium Association joined AEGIS Europe.  From the  website, “AEGIS is an alliance of manufacturers from more than 30 sectors, including steel, ceramics, solar panels, car parts, train builders, textiles, bicycles and many others.”  Both the MTE and AEGIS were born out of concern that our respective Federal Governments may not see the economic risk associated with granting MES to China and only focus on perceived political benefits from appeasing the PRC.

For very similar reasons, the CTTF was formed by Century Aluminum late in 2015.  Their site includes a documentary and captures news items that address the topic.  Unlike the MTE, this group consists primarily of aluminum interests and appears to be focused on the WTO/MES issue.  The AEC plans to join this effort in the coming weeks.

IFTA is a group just now being formed, by yours truly, consisting of aluminum extruders, suppliers, and aluminum extrusion associations across the globe.  So far, voices from Canada, the U.S., Australia, Israel, the Gulf States, Columbia, Mexico, Argentina, El Salvador, and many others have expressed interest in forming this alliance to trade field intelligence, data and documentation, support each other as we can in various country-level trade cases, and form our own voice at the WTO as needed.  The AEC also plans to join this group.  AEC members will hear more about this and its agenda over the course of 2016.  During our Annual Meeting in San Antonio this past March, AEC membership expressed deep concerns over China’s ambitions in the aluminum industry.  Taking on a worldwide fight is well beyond the Council’s current capacity or calling.  However, supporting a group like IFTA can be the vehicle interested AEC members may choose to support to help us win this international fight.

In summary, it is clear the worldwide aluminum industry is looking for a solution.  Whether or not that comes in the form of negotiations and a Memorandum of Understanding like we saw in the ‘90s with the Russians, or through the court system of the WTO, is anyone’s guess.  What we do know is the industry is aligning itself in enough ways that prepares us to win that battle when it comes.

The Calm Before the Storm

Over the last 3 to 5 weeks, much of our activity in the China trade case has been behind the scenes.  Our Sunset Review filings are being finalized and delivered.  The 4th Administrative Review is a few weeks from a preliminary decision, and work on the scope requests is being conducted by our attorneys and the Department of Commerce (DOC).  However, this quiet work will come to its completion in the coming weeks and will either bring us lots of good news that translates into a resolution of many open issues, or put us in a position where we must restart the battles on many, if not all, fronts.

The most important determiner of our future is whether or not the International Trade Commission will call for a full or abbreviated Sunset Review.  The DOC has already ruled they are okay with a partial review.  We will know in a few weeks.

Next is how the Administrative Review unwinds this year.  Most of the major issues we’ve historically faced have been settled in prior reviews.  So, this process, which appears to be evolving into a routine activity, has few surprises in store for us.  We aim to maintain the gains we won last year when the combined rate ran up to the 80-108% range, depending on exporter.
Lastly, it comes down to the curtain wall scope issue.  We expect an appeal from the Curtain Wall Coalition and the DOC by the end of the year.  Until a decision on the Zhongwang pallets and 5000-series alloy extrusions we will be on pause awaiting the outcome. It will be a few weeks until we hear back on these issues.  The DOC is investigating and has up to 150 days to make a preliminary decision.

So, it was a great time to take a bit of a break from the case and enjoy a wonderful ET 2016 event.  If you were there, you saw the fantastic educational offerings, exhibit hall, and great networking.  While China trade was on the mind of a few, most were really fixated on the growth our industry has witnessed and how impressed we all were that we have come together as an industry to become better extruders so we can capture the many new applications being developed.

Fair Trade Update: 5-Year Sunset Review Timeline

If you weren’t in San Antonio last month for our special Fair Trade meeting and our impromptu Town Hall meeting, then you missed the most informative and impactful live discussions we’ve had in many years.  During those sessions we covered everything from the curtain wall case to China 2016.  The announcement from the Department of Commerce (DOC) that they were launching a circumvention case against China Zhongwang and the Chinese aluminum extruders for using the so-called 5050 alloy added a fiery backdrop to our dialogue.

This year is pivotal for our case.  In a matter of weeks we will learn from the International Trade Commission (ITC) and the DOC whether they will want a full Sunset Review or not in this, the five-year anniversary of the trade orders.  We anticipate that it will be a full review, and we are preparing for that eventuality.  While confidence is high that we will be granted another five years, we cannot take that for granted.  Our first order of business is to collect industry data very quickly and get it to our attorneys at Wiley Rein.  Here is a summary of the timeline:

• DOC and ITC will publish their initiation notices on or around April 1, 2016
• We will have 30 days after the publication of the notice of initiation (approximately May 1) by which to file our substantive responses
• If the DOC conducts a full sunset review, we can expect its preliminary determination to be issued around July 20 and its final determination to be issued around the end of November (and possibly as late as the end of February 2017)

If a full sunset review is conducted on the ITC side, we can expect a final determination around the end of March 2017. In such a case, the industry will need to prepare to submit additional questionnaire responses and engage in a full briefing and hearing schedule, which the ITC will publish when we get closer to those events.

Now, let’s go back to the circumvention case.  I believe we are entering the beginning of the end-game on the 5000-series alloy issue. After waiting for two-plus years to learn if the DOC would call these extrusions ‘in scope’, we finally got our decision.  The DOC determined that 5050 alloy was out of scope, but they immediately launched the circumvention investigation we asked for against Zhongwang last October.  What we were especially pleased to learn was that the DOC has agreed to not only investigate Zhongwang, but also all exporters and importers of the alloy.  This gives us a chance of settling this once and for all.

Members also learned the story behind the Court of International Trade’s recent decision to remand the DOC on their decision in the curtain wall case.  We learned what lies ahead in that regard, the timeline, and the legal strategy.  I won’t discuss that further in this forum, but I am happy to take your calls on the matter.

Likewise, we learned more about the status of our scope clarification/circumvention petition regarding the supposed aluminum pallets.  I won’t go into details here, but attendees were briefed on our strategy moving forward.

For now, the key issue is to submit your data to Wiley Rein.  There will be more to follow, so stay tuned.  And again, without your continued support, none of this would be happening.

The AEC to the DOC: Time’s Up!

For over two years the U.S. aluminum extrusion industry has asked the Department of Commerce (DOC) one simple question: Are the so-called ‘5000-series’ products that have been coming into our market duty-free covered by the scope of our orders or not?  Having anticipated a response last autumn, then this winter, you can imagine our reaction to seeing the can be kicked down the street for another few weeks.

What is different about our approach this time is that in October, we not only filed a scope clarification case, but we also filed a circumvention case.  As a result of that, we are now asking commerce if these extrusions are in scope or a blatant act of circumvention in order to evade duties.  It’s one or the other.  There is nothing on the record that suggests that 5000-series alloy substitution serves any other purpose than to cheat the Federal Government of the United States out of duties and the Aluminum Extruders Council out of the full protection of its orders.

Period.

So, when we learned this week that even framing the question in that form is still not enough to bring this issue to a conclusion, we had to publicly respond. We aren’t alone in our disappointment.  Several Senators supported our filing of our Scope Clarification/Circumvention case against Zhongwang.  When news of these delays came to their attention, they added their voice to the discussion.

Most believed our Zhongwang filing was only about these slabs of welded aluminum extrusions the company claimed were aluminum pallets.  That is part of our case, but not all of it.  In fact, there are essentially four elements to our case: 1) Scope Clarification on these aluminum slabs, 2) Request for investigation of possible circumvention with these aluminum slabs, 3) Scope Clarification on the so-called 5000-series alloy extrusions (previously filed and referenced in this matter), and 4) Request for investigation of possible circumvention using so-called 5000-series alloys.

In December, the Department of Commerce delayed its decision on our four-part filing and requested we break it into three pieces.  Remember the scope request on the 5000-series alloy, the fourth piece, was already in the pipeline - for 2 years!  We, of course, complied.  Having believed we had developed every available legal angle, complied with their request to re-file, we waited with eager anticipation for their decision on January 21, 2016.

Then the snowstorm came.  Washington D.C. was shut down, and no decision was issued.  So, we waited, and waited…

And, now we learn it was postponed again.  This time there is a questionnaire they want us to file.  In so doing, they postpone the decision for 45 days after we return their questionnaire.  While we agree a questionnaire needs to be completed, we think they are asking the wrong party to fill it out!  It’s time for Zhongwang to answer some questions.

Just launch the investigation and submit the questionnaire to them!  That’s all we are asking.  If there is nothing to hide or conceal, then give Zhongwang a chance to do that!  If there is, then let’s get to it!
We realize the DOC team has worked long and hard on our case.  We know it’s been complicated and challenging.  Certainly, many of these folks have put in many long days in a job that may not always be fun, but at least they have jobs.  Would it change their view if they encountered one of the families that have lost their income due to the alleged illegal and unfair trade practices and government indecision?  I imagine it would.  Faced with a similar scene some years ago in rural Louisiana, I can tell you, it changed mine.

AEC members, know this, I will not stop.  We will see this through.  If any of you have heard the rumors I’ve been hearing in recent days, you too may be cautiously optimistic that help is on the way.  On these four matters, and whatever other tentacles may end up being attached to them, know that this fight has only just begun!