Canadian aluminum caught between China’s rise, U.S. protectionism – by Ian McGugan (Globe and Mail – April 1, 2017)

http://www.theglobeandmail.com/

By his calculation, about 150,000 manufacturing jobs in the United States depend on imported Canadian aluminum. “Few people realize how connected and complementary the industries have become,” he says. “Both economies are very, very interlinked in terms of aluminum.”

Aluminum, one of the world’s more mundane metals, has suddenly turned into a dramatic case study in how global trade tensions can cast clouds of uncertainty over a swath of the Canadian economy.

Part of the challenge to Canadian manufacturers of the metal is nothing new. It consists of a seemingly endless wave of low-cost aluminum from Chinese smelters. Over the past decade, the Asian giant’s surging production has clobbered competitors around the world and dragged down prices of the metal by nearly a third.

But now, the relentless rise of Chinese aluminum is being met by a surge of protectionism, particularly in the United States. The Obama administration filed a complaint in January with the World Trade Organization, alleging that Beijing unfairly subsidizes its aluminum industry with artificially cheap energy as well as state-directed loans at bargain-basement prices.

In March, an international assortment of industry groups fired off letters to global leaders, including Justin Trudeau, urging them to take action at the G20 summit in Hamburg, Germany, in July. “The enormous excess capacity in China … not only significantly distorts international trade flows affecting all our countries but also undermines global stability,” asserts the letter from chiefs of aluminum industry associations in Canada, Europe and the United States.

Canada has a rather large dog in this fight. The domestic industry, dominated by Rio Tinto, Alcoa and Aluminerie Alouette, employs more than 9,000 workers. The industry looms especially large in Quebec, but also has a sizable footprint in places like Kitimat, B.C., where Rio Tinto has operated a smelter for more than 60 years.

For the rest of this article, click here: http://www.theglobeandmail.com/report-on-business/economy/economic-insight/canadian-aluminum-caught-between-china-us-trade-approaches/article34538507/

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