FACE-off looming as aluminium industry attacks customs duty

By Peter Chapman

Date: 15/04/04

THE Czech Republic, Slovakia, Slovenia and an international group of aluminium users are calling for the EU to shield industry from a 6% customs duty on aluminium supplies they claim is skewing fair competition in the European market.

The three countries, due to join the EU next month, have tabled formal requests to the European Commission to protect firms that make products from primary aluminium - such as car doors or circuit board components - from the crippling effects of the duty.

The Czech Republic has demanded a duty free quota for the entire EU of 1 million tonnes, with 85,000 tonnes reserved for Czech firms, who are worried they will go out of business when they start paying the EU's inflated rate for aluminium.

Slovenia has demanded an annual duty free quota of 63,500 tonnes while Slovakia has asked for 10,000 tonnes a year.

Meanwhile, the Brussels-based Federation of Aluminium Consumers in Europe (FACE), representing companies that use the metal in their business, said it will re-table this week a formal request to freeze the duty it claims has cost industry €3 billion over the last ten years.

Roger Bertozzi, FACE's EU and WTO affairs director, said his organization wants the Commission to pass on its request to the Council of Ministers for a formal vote. He said the EU executive refused to do so in the past because France - home to Pechiney, recently bought by Canada's Alcan - raised objections.

If the Commission fails to heed the request, he said the group would take it "to the European Court of Justice for what we think is a failure to act".

He said the 6% duty is indefensible because the EU is a net importer of primary aluminium and faces a shortage of supply thanks to the relentless demand from China. Keeping the duties acts as a tax on his group's members, driving jobs outside the EU.

However Arancha Gonzalez, spokeswoman for Trade Commissioner Pascal Lamy, cast doubt on the chances of countries winning concessions to help their industries.

"Exemptions from EU trade rules [for aluminium] is something these countries should have negotiated in their accession to the EU - Hungary did for example, until 2007.

"No-one else did it. We are not very eager to have exemptions to common trade rules. You cannot have a situation like a piece of Gruyere cheese with holes all over the place."

Critics of the duty allege that it only serves the interests of the big three aluminium suppliers, Alcan, Alcoa and Norsk Hydro, of Norway. They say these companies own many plants within the EU and in poorer countries not subject to EU duties, and can use this cheaper aluminium in their own final products - giving them a competitive edge over rivals who feel the full force of the duty.

But Gonzalez said there was no proof that the duty is hurting EU firms and is harming fair competition: "We have looked into this and concluded that the conditions [for an end to the duty] are not there."

Crucially, she said the duty strengthens the EU's hand in the faltering World Trade Organization talks on trade liberalization. "This is a bargaining chip that we have in our hands. Why give that away?"

FACE's Bertozzi hit back by expressing dismay over the fact that "thousands of companies are being held hostage by the bargaining tactics of the Commission".

http://www.aluplanet.com/eng/face.asp http://www.aluplanet.com/eng/face.asp

---