The aluminium associations of the United States, Europe, Canada and Japan call on G7 governments to provide leadership in support of ambitious multilateral and plurilateral negotiations to discipline trade distorting government support and state ownership in industrial sectors. There is clear and compelling evidence today that existing multilateral subsidy rules are inadequate to remedy the scale and scope of state intervention in aluminium markets.
The just released report of the Organisation for Economic Cooperation and Development (OECD), “Measuring distortions in international markets: Below-market finance”, OECD Trade Policy Papers, No. 247, OECD Publishing, Paris, provides new insights across more than 300 firms in 13 industrial sectors.
OECD analysis included 32 aluminium companies with a combined 70% share of the global market. Over the past decade governments provided considerable support in the form of below market borrowings, the vast majority of which went to Chinese firms. The report estimates the value of China’s support to have ranged between 4% and 7% of the annual revenue of these firms; this is in stark contrast to other firms in the sample which received support in the vicinity of 0.2% of their annual revenue. Over the same period, China has accounted for most of the increase in global production capacity.
In a joint statement Tom Dobbins, President & CEO of The Aluminum Association, Gerd Götz, Director General of European Aluminium, Jean Simard, President & CEO of the Aluminium Association of Canada and Yoshihisa Tabata, Executive Director of the Japan Aluminium Association said: “The scale and duration of state support is resulting in output growth in excess of normal market demand, in turn depressing global prices and threatening the viability of un-subsidised firms. Energy efficient production and recycling systems in the US, Europe, Canada and Japan can make a major contribution to sustaining good jobs in rural areas, ensuring reliable supplies of strategically important materials, and realising a low carbon economy – but only if international markets along the aluminium value chain are free, fair and open.
On behalf of our member companies, and the more than 2 million direct and indirect jobs that they support, we are committed to work with governments and international organisations to contribute to modernising trade rules that will enable all producers and traders to compete under conditions that are transparent, predictable, and fair.”