US expected to launch WTO complaint over Chinese aluminum subsidies

Workers ride on an motor rickshaw through an aluminium ingots depot in Wuxi, Jiangsu province.
Workers ride on an motor rickshaw through an aluminium ingots depot in Wuxi, Jiangsu province.PHOTO: REUTERS

WASHINGTON (Reuters) - The Obama administration is expected to launch a complaint against Chinese aluminum subsidies with the World Trade Organisation on Thursday (Jan 12), a person familiar with the matter said.

The complaint will likely add to rising trade tensions between the world's 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 complaint, to be filed by the US Trade Representative's office, is expected to cite "artificially cheap loans" from Chinese banks and artificially low-priced inputs for Chinese aluminum makers including electricity, coal and alumina.

It will cite such subsidies contributing to excess Chinese capacity and hurting American workers and companies, according to the person, who spoke on condition of anonymity because the case is not yet filed.

The pending complaint follows an October request for a WTO case against China's aluminum trade practices by the two US senators from Ohio, home to several U.S. aluminum producers, and six other senators.

China has rapidly expanded its aluminum production capacity in recent years and currently produces more than half the world's aluminum. This has driven price declines that have reduced the number of operating US aluminum smelters to five from 14 since 2008, causing the loss of 15,000 US aluminum production jobs, the senators said in October.

"When China drives down aluminum costs by cheating, Ohio workers and manufacturers pay the price," Senator Sherrod Brown, an Ohio Democrat, said in a statement issued late on Wednesday.

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

According to the person familiar with the complaint, the United States will request consultations with China to address concerns over its subsidies.

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.