Thursday, April 16, 2015

2015 Shaping Up to be an Active Year

During our Annual Conference in Palm Desert last month we discussed our multi-front battle with Chinese extruders.  This included Annual Administrative Reviews, Scope Requests, Lobbying, and Circumvention.  I can tell you that 2015 will be an active year in every area.

We are in the middle of this year’s Administrative Review, which is our third one since the orders took effect in 2011.  There are a couple of key issues to address for the Administrative Review. The first key issue this year is which surrogate country will be chosen to calculate production costs used to establish duties.  We have a key opportunity this year because the previous surrogate country, The Philippines, is no longer on the ‘list’.  It gives our industry an opportunity to argue for a country whose economic scale more closely resembles China.  We fought hard to replace The Philippines in previous years because it was clearly not a good surrogate given China’s economic growth in recent years.  Now that China has become the world’s largest economy we now have a chance to present the Department of Commerce (DOC) with a more legitimate alternative.  The second key issue involves the mandatory respondent selected by the DOC.  This year, Jangho has been picked and will be forced to present their data.  As those close to the curtain wall case know, Jangho has been a consistent player in the curtain wall scope request.  Because the DOC decided (and successfully defended to two appeals) that curtain wall was covered by our orders, all of their production input costs will be used to determine the subsidy rates in production.  Considering the aluminum and glass usage in that product, we have a real opportunity to prove a larger gap in manufacturing costs.  In fact, the combination of a more comparable surrogate country and a mandatory respondent we know is heavily subsidized could translate into higher duties.  The legal case is underway and the preliminary decision is expected in June.

The 5xxx series scope request is still under review by the DOC.  We continue to work this case with our legal team, Wiley Rein, with our lobbying efforts, and by working with U.S. Customs.  Reports continue to come into headquarters that shipments are being held at the ports across the country as material is tested to validate its declared chemistry.  I’ve also had fresh reports of 5xxx being used in other applications.  I estimate that as much as 20 million pounds of this product is coming into the U.S.  As soon as the DOC rules in our favor, all new shipments into the U.S. will be subject to tariffs.  With a decision expected in the coming weeks that means orders in production now may be met with an unhappy surprise once they get to a U.S. port.

Our lobbying efforts have been focused on the pending Trade Promotion Authority (TPA) bill making its way through Capitol Hill.  Several AEC volunteers have taken time away from their businesses to travel to D.C. in the last few weeks to make our case on a number of legislative fixes we want included in the bill. We believe these fixes will go a long way in shoring up our position on several issues.  They may also allow us to reverse some court decisions we couldn't address through our legal efforts.  A bill coming out of the Senate appears to do just that.  As it makes its way to the House of Representatives we are quickly putting a fresh list of Congressional targets for us to visit.  Of course, while we are asking for support with the TPA language, we take the opportunity to ask for help on the 5xxx issues, surrogate country selection, etc.

Even with all of that, the most active aspect of our case involves circumvention.  I am investigating five different reports.  It has become clear to me that the fraud and deceit being used by these companies goes to the highest levels of the Chinese government.  As we chase down the individual reports, we are also building the case for the systematic issues that are not only allowing this to go on, but encouraging it. The Chinese continue to produce aluminum and secondary aluminum products beyond their domestic needs. In order to liquidate this production, they continue to encourage exports.  Foil, sheet, and billet products are being flooded into markets all over the globe.  With extrusions becoming subject to tariffs in a number of key markets, such as the U.S., Canada, and Australia, Chinese extruders must resort to fraud in order to maintain production.  Their footprints are becoming more and more obvious, and will ultimately lead to their downfall.  If you know of such a case, report to me at once.  With every incident, the file against them builds.

As you can see, the case remains active, and will throughout 2015.  If you’d like to get more involved, or would like more detail, contact me at jhenderson@tso.net.  Thank you for your continued support!