Tuesday, February 28, 2017

ITC Sunset Hearing, Like Product Challenges, Century’s WTO Case and More

Last month the Aluminum Extruders Council (AEC) testified before the International Trade Commission (ITC) in its request to have our trade orders against the Chinese aluminum extrusion industry renewed for another five years.  Those that testified included Brook Hamilton, Bonnell Aluminum Extrusion Company, Sue Johnson, Futura Industries, Jason Weber, Sapa Extrusions, Rick Merluzzi, Metal Exchange/Pennex, Bennett McEvoy, Western Extrusions, Jeff Henderson, AEC, and Alan Price and Robert DeFrancesco from Wiley Rein.  We expect to hear the ITC’s decision next month.

The hearing went very well.  We remain confident that the ITC will renew our orders.  However, there were ‘like product’ challenges to our case that required defense.  Like product challenges are similar to scope requests.  In essence the argument is whether a certain product, or family of products, should be excluded from the orders because they are so different from aluminum extrusions.  Three products were challenged: heat exchanges, mechanical fittings, and appliance handles.  We will have to wait to see how the ITC deals with these cases.  Their decision will be a part of the overall decision to either continue or discontinue our orders.

The other big news in our industry was the announcement by the United States Trade Representative’s (USTR) office to take Century Aluminum’s case against China’s overproduction of aluminum to the World Trade Organization (WTO).  The AEC had lent its support of this case since last summer.  Our membership expressed deep concern about the prospect of China overtaking the world production of aluminum and what that would mean to our future.  We have rallied behind this effort as the clearest path available to address this growing concern.

Last month I briefly wrote about the increasing reports of cheap Vietnamese extrusions.  You may have read that Australian extruders recently filed a trade protection case with their government against Vietnam and Malaysia.  It is clear that this is a mounting threat, and one we intend to get in front of as quickly as possible.  Many believe these extrusions are simply transshipments from China.  While the jury is still out on that, it is clear that billions of pounds of extrusions are being shipped from Mexico, the U.S., and even Malaysia to a growing stockpile in Vietnam.  The estimated volumes suggest the inventory of extruded aluminum in Vietnam from these shipments is more than four billion pounds.  Obviously, these shipments are not heading to Vietnam due to an unprecedented growth in the demand of extrusions in Vietnam.  Please contact me with any information you may have regarding Vietnamese exports to the U.S.

The curtain wall coalition received some good news last month when the Department of Commerce, once again, issued a decision that stated unequivocally that curtain wall extrusions and unitized curtain wall are clearly in the scope of the orders.  This latest decision will put pressure on the Chinese to either appeal this (again), or walk away.  Should they appeal, we are confident that they will lose in court for the fourth time.  For more information regarding the curtain wall case visit their site: curtainwallcoalition.org.

In summary, it appears we have excellent momentum with our case going into 2017.  However, we remain vigilant on the growing threat from Vietnam.  So, I invite AEC members to join us next month at our Annual Meeting & Leadership Conference.  It will be an excellent opportunity for us to gather and discuss these issues.

Wednesday, January 18, 2017

On the Eve of the Sunset Review

Jeff Henderson
This month representative members of the Aluminum Extruders Council will join me in Washington D.C. to testify before the International Trade Commission (ITC) seeking another five years of trade protection from our orders.  This hearing will be followed by a decision from the ITC to either end or extend our orders.  We are confident in our success. Please note that once again no one representing the Chinese extrusion industry will be present to rebut our testimony.  So, it seems reasonable to expect our petition to be extended.

There will be companies testifying that their particular product should be excluded from the orders because it is not a ‘like product’ to extrusions.  We saw this in 2011 when representatives from the shower and bath industry and from a heat sink manufacturer made their case that they should be excluded because what they bought from extruders was so dissimilar to a ‘real extrusion’.  In that round the shower and bath folks lost, but the heart sink manufacturer walked away with somewhat of a win.  This time we expect to hear from companies making appliance handles, heat exchangers, and possibly some others.  For the most part, none of these items are new to the ITC or DOC.  The question has been argued on the scope request side with the Department of Commerce, and now these companies are taking their case to the ITC.  I don’t believe they will be successful.

Once the Sunset Review is complete, and the orders extended, there could be a period of relative calm. Think of it.  For the last 18 months to 3 years we have been very focused on circumvention and transshipment schemes.  While there will always be battles like these to wage, our most direct challenge has been confronted, and we won!  If that indeed does signal some level of victory for our side, then we may see things settle down this year.

However, headquarters is getting a number of calls about Vietnamese imports.  Many of those reports come with details that suggest these extrusions could actually be coming from China and then shipped to the U.S.  That is a serious offense and criminal charge if proven true.  In cases where hard evidence is gathered, we are in a strong position to take those reports to Customs.  This has been a tactic for some time now.  Many of us have been disappointed in the lack of urgency from our governing bodies.  We are hopeful that the new administration will take a stronger role in enforcement areas like these.

Elsewhere, I want you to be aware that we are awaiting the final determination from Department of Commerce (DOC) in the 5050-alloy case.  Based on their preliminary decision in late 2015, we are confident we will see a similar outcome.  In that preliminary decision the DOC agreed with us that the minor change in chemistry made to these so-called 5xxx alloyed extrusions a clear case of circumvention.  While ZhongWang was the target of our filing, the DOC agreed that this is a bigger scheme than just what ZhongWang was doing.  So, they made the proclamation industry-wide.  Assuming we get that final decision, this is a huge win for the industry.

The other issue of note is the fake pallets case.  In this case the DOC decided that pallets made from unalloyed aluminum extrusions are covered by the scope of our orders.  While we would have preferred to see the decision cover all alloys of these fake pallets, we can reserve the right to make that case if we see further shipments.  In the meantime, as reported in the Wall Street Journal, this case is still being investigated.  We stand ready to help those investigators as they may request.

So, what will this year bring? It’s hard to be certain.  Clearly we hope to see a successful Sunset Review, and conclusion to these open trade enforcement issues.  At that point we stand ready to take on the next challenge.  Surely by now, those that think they can injure our industry with these schemes have come to learn that the AEC will NOT stand idle.  Instead, we are ready to defend our industry to the end.

Extruder Survey: Miscellaneous Tariff Bill Petition

This month I come to you with a special request. The International Trade Analysts at the U.S. International Trade Commission that are assigned to the Miscellaneous Tariff Bill Petition (MTBP) process are identifying domestic producers of the following aluminum products, or products that are like or directly competitive with those listed below. Legislation is pending to lower or eliminate tariffs on these items:

  • MTBP 2219: Machined cast aluminum loupe mountings with polytetrafluoroethylene coating (used in lights for dental exams and procedures)
  • MTBP 2746: Aluminum roof brace fittings for sheds
  • MTBP 3100: Aluminum extension poles; aluminum roller frames; aluminum adjustable frames designed for holding paint rollers of different sizes

We have created a survey asking our members if they ‘do’ or ‘can’ make extrusions for these applications (not necessarily ‘will’). If the answer is yes, we will put them on the list of domestic producers that can make these items.


Our attorneys will take that list and file our response. Responses are due by January 31, 2017. Thank you in advance for your cooperation and participation!

Tuesday, December 13, 2016

Several Key Issues in Play

As we head into December there are several key issues in play.

Sunset Review

Wiley Rein has gathered information from the industry and is quickly converting that into a filing for our case.  They have told me that we had a good representation of the industry in the data collected.

Remaining Timeline

January 10, 2017 Prehearing Report Issued
January 18, 2017 Prehearing Briefs
January 19, 2017 Request to appear at Hearing
January 25, 2017 Prehearing Conference
January 26, 2017 Hearing
February 6, 2017 Post-Hearing Briefs
February 23, 2017 Report to the Commission (APO Release)
March 1, 2017         APO Release
March 3, 2017         Final Comments
March 10, 2017         Commission Vote
March 27, 2017         Determination Expected

Administrative Review

We received the DOC’s final determination in this year’s Administrative Review.  As expected, Commerce found that Chinese producers dumped aluminum extrusions in the U.S. market during the period of review (May 2014-April 2015) in margins ranging from 33 percent (PRC-wide entity) to 86 percent (separate rate respondents).  Commerce continued to assign the PRC-wide entity a dumping margin of 33 percent because no review was requested on the PRC-wide entity.  While Guangzhou Jangho Curtain Wall System Engineering Co., Ltd. and Jangho Curtain Wall Hong Kong Ltd. (collectively, Jangho) failed to participate in Commerce’s proceedings for the third consecutive review, the agency refused to increase Jangho’s margin above the PRC-wide rate.  Finally, the Department continued to assign the separate rate (i.e., 86 percent) to JMA (HK) Company Limited when the company was granted a separate rate in the preliminary results, but later withdrew from the Administrative Review and requested that all of its business proprietary information be removed from the record.  JMA did so in an attempt to become a member of the PRC-wide entity and receive the lower 33-percent margin in the final results.  Commerce found that JMA attempted to manipulate the administrative review process.  To preserve the integrity of its proceedings, the agency assigned JMA the higher separate rate margin (i.e., 86 percent) for the final results.

Scope Issues

The 5050 alloy preliminary decision was as we had hoped.  The pallet issue decision was postponed until 12/9/16.  We are still confident of a ruling that these pallets are covered by the scope of our orders.


The Australians have filed for protection against extruders in Vietnam and Malaysia.

So, we expect an exciting and busy Q1 in 2017.  Thanks for all your support!

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.!


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!