Tuesday, November 8, 2016

The Defense of our Orders

For months now I’ve reported that the center of the universe for our Chinese aluminum extrusion tariff orders has moved from being petitioners, to fighting through an unprecedented number of scope issues, to now, defending our orders.  To that end we have a number of issues still on the table and still unresolved.  We are now well over a year since we petitioned the Department of Commerce (DOC) to do something about the fake pallets and 5000-series alloy issue.  During that time we have visited with the DOC, sought and received help and political pressure on the DOC from many of our senators, and even put pressure on them through the media.  Finally, late last week we received the preliminary decision from the DOC on the 5050 alloy issue.  Now we wait for the pallet decision.

For some time now we have been taught by the DOC’s lack of responsiveness that the only way to get some movement is to harass our elected officials into berating the DOC.  With the election just days away, at the time this entry was penned, it appears bureaucrats are preparing for their next job instead of focusing on today’s work.  Will we get a different DOC with the change in administrations?  Who knows?  So, in the meantime, we will keep the pressure on them, and if necessary we will make another visit to D.C.!

Recently, the media, and especially the Wall Street Journal, have written a series of articles about ZhongWang and their business affiliates.  This in turn has taken our story to the front pages. This will help us keep our issues alive in D.C. during what could be an uncertain transition in a lame duck session.

I thought I would use this month’s report to update everyone on a few questions I’ve been asked.


  1. Has the AEC taken a position on ZhongWang’s purchase of Aleris? The answer is, ‘yes’. The AEC has filed a brief in opposition to this purchase.
  2. What are the current duty rates?  The answer is 106%.  Now that may vary depending on the company.  However, for a straight up importer of extrusions they will most likely pay 106%.  That breaks down into 80% antidumping duty and 26% countervailing duty.  We will get a final decision from the DOC this December on whether or not they will stay with that rate.
  3. What are our chances of winning the Sunset Review?  Since no one is opposing our base orders, it appears the orders will be renewed.  However, we will have to make the case for this, even though there may be no opposition.  We will have ‘like product’ challenges that include appliance handles, heat sinks, and heat exchangers.  This means that representatives of these products will try to convince the International Trade Commission that their products are so different from extrusions that they must be excluded.  On these issues we feel confident we will have a winning case.
  4. What is the AEC doing to help preserve a domestic aluminum supply?  This is a tough one.  Right now, Century Aluminum is leading the charge to do just this.  They have developed a strong case that they are attempting to persuade the United States Trade Representative’s office to take to the World Trade Organization.  We have supported this effort in every way possible.  The AEC believes that the Century case will not only force the Chinese to stop the over-production of aluminum, but expose the systemic issues within Chinese policies that drive this type of behavior.  Furthermore, we have supported the efforts of the Manufacturers for Trade Enforcement.  This group is working hard on a diplomatic solution.  Our view here is that in the end, the solution will be found through negotiations, but it may take a trade case at the WTO to make that happen.
  5. Is it true that you are being sued by Aluminum Shapes?  Yes, it is true.  I have been sued personally by Aluminum Shapes.  As you can appreciate, I won’t comment publicly about the case.  However, I want the members to know that I am innocent and well prepared to defend myself.  This in no way will impact my resolve or determination to make our marketplace a free and fair trade environment.  

So, here we are, fighting for the survival of our industry while our Industry Promotion teams work hard to create a larger demand for our products and our Business Excellence teams are making us better extruders.  That is our strategy in motion.  It is a fight, but as they say, “It’s not the size of the dog in the fight; it’s the size of the fight in the dog that matters.”  The AEC has shown the world that this dog has a lot of fight; we know it, and we, will win as a result of it.

Monday, October 10, 2016

Making Our Case Known

In case you missed it, the Wall Street Journal wrote back-to-back articles about Zhongwang and Aluminum Shapes.  In a scathing indictments the Journal linked Zhongwang to the massive inventory of aluminum extrusions in Mexico and connected Aluminum Shapes to Zhongwang about the so-called aluminum pallets.  Consequently, both Zhongwang and Aluminum Shapes came out with their denials.  Regardless, the issue certainly has grabbed the attention of the Department of Commerce (DOC) and Customs.

For the AEC the timing was perfect.  With our fall conference located in Washington DC, we were able to take our case to Capitol Hill asking for support in pressing Commerce on a decision about the pallets.  We expect the DOC to rule in our favor on the pallet issue by declaring them within the scope of our orders and therefore subject to tariffs and fines.  If the DOC should decide not to call the pallets in scope, then our petition calls on them to immediately launch a circumvention investigation.  Either way, we are in a strong position to bring this issue to justice.

For those awaiting a decision from Commerce on the 5000-series alloy issue, we continue to press the DOC to send additional questionnaires to all known importers and exporters of these extrusions, which are clearly a circumvention scheme.  I should also comment that I am hearing rumors that the next substitution the Chinese will try to exploit is 7000-series alloyed extrusions.  I am asking AEC members to send me any details and news they are seeing in the field related to this issue.

During the AEC Management Conference, Robert DeFrancesco, our lead attorney from Wiley Rein, outlined the next steps in our Sunset Review.  The International Trade Commission will be issuing new questionnaires for our industry participants.  We expect to see those forms very soon, and anticipate them to be due back to the International Trade Commission (ITC) before the end of 2016.  Stay tuned for more information on this.  While we don’t expect any opposition to our base extrusion case, the ITC will hear ‘like product’ arguments from companies buying and selling heat sinks, appliance handles, and heat exchanger units.  The petitioners in the ITC hearing will be arguing that their product is distinct and different from extrusions.  While these are similar arguments we’ve seen in scope challenges at the DOC, they are different.  We will certainly be arguing that these products have generally been considered in the scope of our orders, and allowing them into our market will cause harm to our industry.

Recently, the AEC went on the record in opposition to the proposed purchase of Aleris by Zhongwang.  We’ve added our voice to others, including the United Steel Workers, in an effort to educate law makers about the potential harms to our industry and the overall aluminum industry.
Clearly, the AEC has been busy getting its voice heard all over the world!  The number of news outlets that covered the Wall Street Journal article is in the hundreds.  In fact, the news that the Mexican metal horad could account for 6% of all the aluminum in the world went viral.  It is great to see the coverage on these issues and for the AEC generally.  As you now know, we will not back down.  Instead we aim to keep the pressure on as we await the World Trade Organization’s (WTO’s) decision on China’s request for market economy status.  With all of the recent revelations about the largest extruder in China, we believe we are doing more than our fair share of bringing these issues to light.

Tuesday, August 30, 2016

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

Monday, July 18, 2016

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!

Thursday, July 14, 2016

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.

Monday, June 13, 2016

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.


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.

Monday, May 23, 2016

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.