Section 232 of the American Trade Expansion Act of 1962 has been in the news lately as U.S. authorities have used it as a measure to impose tariffs on China and Canada citing national security.
In an open letter by the Aluminum Association of Canada (AAC), the group called on the U.S. and Canada to reach a deal on NAFTA.
“We encourage Canada and the U.S. to reach a modernized NAFTA agreement that provides a full and permanent exemption – without quotas – for aluminum imports from Canada,” stated Jean Simard, president and CEO of AAC.
U.S. Commerce Secretary Wilbur Ross echoed similar comments in testimony to the U.S. Senate Finance Committee earlier this year.
“Our objective is to have them revitalize NAFTA, a NAFTA that helps America. And as part of that, (Section) 232 would logically go away, both as it relates to Canada and as to Mexico.”
Since 1981, Section 232 has only been used 16 times covering imports items such as crude oil, plastic injection moulding, nuts and bolts, to steel and aluminium.
The ACC noted aluminium is the “material of choice” within North American when it comes to the automotive and aerospace industries. It stressed the metal would “competitively benefit America if it is freely and fairly traded” and that the supply chain should be “considered as part of the U.S. national security supply chain, as it has been since World War II.”
“Section 232 is intended to be used to address threats to the United States’ national security,” stated Simard. “The fact is aluminum from Canada has played a key role in U.S. defence efforts over the past century and would do so again if needed in the future, so it should not be subject to tariffs or quotas.
“The United States’ aluminum industry, labor movement, and end users are united in the view that tariffs on Canadian aluminum should be lifted once the NAFTA negotiations are complete.”
The AAC stated the global aluminium industry has been facing an increased surplus in the global supply due to China’s subsidies to primary and semi-fabricated producers. The only way to rectify the surplus, according to the AAC, is by utilizing a multi-country approach.
Whether China and Canada can come to a quick resolution with their American counterparts remains to be seen.