Picture: ISTOCK
Picture: ISTOCK

Washington — The Obama administration has launched a new complaint against Chinese aluminium subsidies at the World Trade Organisation, accusing Beijing of artificially growing global market share with cheap state-directed loans and subsidised energy.

The complaint will stoke already high trade tension between the world’s two largest economies with incoming president Donald Trump taking office next week vowing to cut the US-China trade deficit as a priority.

The US trade representative’s office said on Thursday the complaint claimed China’s actions in the aluminium sector violated the WTO’s ban on subsidies that cause "serious prejudice" to other members of the trade body.

The complaint says "artificially cheap" state-directed loans and coal, electricity and alumina for the Chinese aluminium sector undercuts global prices and artificially expands China’s market share.

"China gives its aluminum industry an unfair advantage through underpriced loans and other illegal government subsidies," President Barack Obama said in an accompanying statement.

"These kinds of policies have disadvantaged American manufacturers and contributed to the global glut in aluminium, steel and other sectors," Obama said. "We’re taking action to protect the workers — at home and around the world — who are hurt every day by these policies. That’s what we’ve done since day one."

The US trade representative’s office said China’s capacity to produce aluminium more than quadrupled from 2007 to 2015 while global prices fell about 46%. China produces more than half the world’s aluminium.

US primary aluminium output fell 37%, although overall US consumption of the metal rose. Nine of the 14 US aluminum smelters have halted production since 2011, and only one operates at full capacity.

The complaint follows an October request for a WTO case against China’s aluminium trade practices by six US senators worried about 15,000 lost US jobs in the sector in recent years.

"When China drives down aluminium costs by cheating, Ohio workers and manufacturers pay the price," said Senator Sherrod Brown on Wednesday.

"Thousands have lost jobs because of unfairly subsidised aluminium from China that has flooded the market and led to overcapacity. It’s past time we get tough on these violations before more American workers suffer," Brown said.

The complaint is the Obama administration’s 16th against China at the WTO on issues including tariffs on broiler chickens, tax rebates for small domestic aircraft and export duties on key Chinese raw materials.

Reuters

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