When Aluminum Prices Are Manipulated Workers Lose Their Jobs

The Obama administration will be launching a formal complaint with the World Trade Organization against China over the subsidies that Beijing provides to the aluminum industry. It is possible for the complaint to escalate the trade disputes between the two largest economies a week before Trump takes over the US presidency.

The formal complaint accuses Beijing of channeling artificial cheap loans from state-run financial institutions to Chinese aluminum producers for the upgrading of their facilities and production expansion. According to people familiar with the aluminum industry, China is also subsidizing aluminum production through cut-rate coal and electricity.

When China manipulates the aluminum prices through cheating, workers and manufacturers in Ohio are negatively affected. When unfairly subsidized aluminum products flood the market, it leads to over capacity and thousands of workers in aluminum factories lose their jobs. It is about time for the US to be tough on these violations otherwise American workers will continue to suffer.

In the past years, Chinese aluminum imports have been thoroughly examined as US authorities probed the allegations that China Zhongwang Holdings Inc has evaded the trade sanctions imposed on the aluminum manufacturer in 2010. Zhongwang has denied any wrongdoings but the Commerce Department last year uncovered that certain exports to the United were designed to avoid the sanctions.

According to a report from Wall Street Journal in October, the Department of Homeland Security has initiated an investigation on US companies that are linked to China Zhongwang that illegally skirted around the punitive tariffs on aluminum. A large stockpile of aluminum traced in Mexico seemed to have connections to Zhongwang’s founder and Chairman Liu Zhongtian. The aluminum stockpile represents 6% of global inventories. US aluminum producers say that the boom in Chinese aluminum production has depressed global prices and affected the US producer’s ability to compete.

In Thailand, aluminum manufacturing makes use of highly flexible development and design capabilities to produce aluminum materials required by various industries. Aluminum plants have a system of control to ensure that products manufactured have a seal of excellence. A wide range of aluminum= products are used by the automotive industry and electronic high end companies.

 

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