WASHINGTON: US President Barack Obama鈥檚 administration has launched a new complaint against Chinese aluminum subsidies at the World Trade Organization (WTO), accusing Beijing of artificially expanding its global market share with cheap state-directed loans and subsidized energy.
The complaint, which seeks consultations with Beijing on the matter, is likely to add to rising trade tension between the world鈥檚 two largest economies as President-elect Donald Trump prepares to take office next week with pledges to reduce US trade deficits with China as a top priority.
The US Trade Representative鈥檚 office said the complaint says China鈥檚 actions in the aluminum sector violate WTO rules prohibiting subsidies that cause 鈥渟erious prejudice鈥� to other members of the trade body.
The complaint argues that 鈥渁rtificially cheap鈥� state-directed loans and coal, electricity and alumina for the Chinese aluminum sector causes such prejudice by undercutting global prices and artificially expanding China鈥檚 market share.
鈥淐hina gives its aluminum industry an unfair advantage through underpriced loans and other illegal government subsidies,鈥� President Barack Obama said in a statement accompanying the announcement.
鈥淭hese kinds of policies have disadvantaged American manufacturers and contributed to the global glut in aluminum, steel and other sectors,鈥� he added.
鈥淲e are taking action to protect the workers 鈥� at home and around the world 鈥� who are hurt every day by these policies. That鈥檚 what we鈥檝e done since day one.鈥�
The US Trade Representative鈥檚 office said China鈥檚 capacity to produce aluminum more than quadrupled between 2007 and 2015, while global prices fell approximately 46 percent. China now produces more than half of the world鈥檚 aluminum.
At the same time, US primary aluminum production fell 37 percent, although overall US consumption of the metal increased. Nine of 14 US aluminum smelters have halted production since 2011, with only one operating at full capacity, the US trade office said.
In a statement on its website, China鈥檚 Commerce Ministry said the US complaint 鈥渓acked a factual basis,鈥� but vowed to handle it according to WTO rules.
鈥淐hina鈥檚 aluminum market is a highly competitive and marketized industry,鈥� it said.
鈥淩elevant loans and raw material purchases are all fully marketized and commercial. The so-called subsidy problem claimed by the United States does not exist.鈥�
The pending complaint follows an October request for a WTO case against China鈥檚 aluminum trade practices by six US senators concerned about 15,000 lost jobs in the sector in recent years.
鈥淲hen China drives down aluminum costs by cheating, Ohio workers and manufacturers pay the price,鈥� Sen. Sherrod Brown, an Ohio Democrat, said in a statement.
鈥淭housands have lost jobs because of unfairly subsidized aluminum from China that has flooded the market and led to overcapacity and it鈥檚 past time we get tough on these violations before more American workers suffer,鈥� Brown said.
The complaint is the 16th brought against China before the WTO during the eight years of the Obama administration over issues ranging from tariffs on broiler chickens to tax rebates for small domestic aircraft and export duties on key Chinese raw materials.