LDN - Business

U.S. launches national security probe into aluminum imports

[April 27, 2017] By David Lawder

WASHINGTON (Reuters) - The U.S. Commerce Department launched an investigation on Wednesday to determine whether a flood of aluminum imports from China and elsewhere was compromising U.S. national security, a step that could lead to broad import restrictions on the metal.

Commerce Secretary Wilbur Ross said the investigation was similar to one announced last week for steel imports into the United States, invoking Section 232 of a national security law passed in 1962 at the height of the Cold War.

Ross told reporters the probe was prompted by the extreme competitive pressures that unfairly traded imports were putting on the U.S. aluminum industry, causing several domestic smelters to close or halt production in recent years.

China, the world's top producer and consumer of the metal, is seriously concerned by the probe and hopes to resolve the dispute through negotiations, a Commerce Ministry spokesman said at a regular briefing on Thursday.

The U.S. move is the latest of several potential U.S. actions aimed at stemming a rising tide of aluminum imports. The Commerce Department is investigating allegations that Chinese companies are dumping aluminum foil into the U.S. market below cost and benefiting from unfair subsidies.

Ross said part of the justification for the investigation was that U.S. combat aircraft such as the Lockheed Martin F-35 joint strike fighter and the Boeing F/A-18 Super Hornet require high-purity aluminum that is now produced by only one smelter, Century Aluminum Co.

He said that company could probably meet U.S. peacetime needs, but not if the United States needed to ramp up defense production for a conflict. The same high-purity aluminum goes into armor plating for military vehicles and naval vessels, he said.

"At the very same time that our military is needing more and more of the very high-quality aluminum, we're producing less and less of everything, and only have the one producer of aerospace- quality aluminum," Ross told a White House briefing.

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U.S. Commerce Secretary Wilbur Ross waves after speaking about new tariffs on Canadian softwood lumber from the White House in Washington, U.S. April 25, 2017.REUTERS/Yuri Gripas

The investigation will determine if there is sufficient domestic aluminum capacity to meet U.S. defense needs and will also assess the effects of lost jobs, skills and investments on national security, Ross said.

Although he said China was a major contributor to the global excess capacity in aluminum production, he said imports from other countries, including Russia, were also causing problems.

"This is not a China-phobic program, this has to do with a global problem," Ross said.

Last November, a dozen U.S. senators requested that a U.S. national security review panel reject the $2.3 billion acquisition of Cleveland-based aluminum products maker Aleris Corp by China's Zhongwang International Group Ltd.

Aleris spokesman Jason Saragian said the aluminum probe announced by the Commerce Department was unrelated to the ongoing review of the merger by the Committee on Foreign Investment in the United States (CFIUS).

"The pending acquisition is not affected by this broad inquiry, because the transaction does not involve any imports from China," Saragian said in an emailed statement.

(Reporting by David Lawder; additional reporting by Josephine Mason in BEIJING; Editing by Peter Cooney and Richard Pullin)

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