When we were young, we learned about fair trade with our childhood friends. We might have traded the neighbor kid our original Marvel® Captain America comic book for a set of Jax®. Today – or any day – this would be considered a questionable trade in terms of dollar value. An Internet search shows a set of 10 Jax and two rubber balls cost about five bucks, while an original Captain America comic book is valued at $2,500.
Why You Need to Care about Fair Trade
Trading items in a commodity market needs to be fair for both sides of the trade agreement. This is why the domestic aluminum extrusion industry began working with the U.S. Department of Commerce (DOC) to enact the Fair Trade Act six years ago.
In early 2010, the U.S. aluminum extrusion industry saw a significant rise in aluminum extrusion imports from Chinese manufacturers. So much so, that these imports were surpassing 20% of the market share.
Witnessing the erosion of domestic production first hand, U.S. extruders investigated why the increase in extrusion imports continued to grow at such a rapid rate. It learned that Chinese government subsidies enabled its extruders to sell product well-below market value.
Pointing to their findings, they banded together with the Aluminum Extruders Council (AEC) to petition the U.S. Federal Government to implement antidumping and countervailing duties – the Fair Trade Act – on the low-priced Chinese aluminum extrusions flooding the market.
If we had not addressed the unfair practice, the growing amount of Chinese aluminum extrusions entering our country would have eventually reduced U.S. extrusion production by nearly 800 million pounds of aluminum, shut down 100 extrusion presses, and cost one thousand U.S. employees their jobs. It was critical that the industry do something to stop this from happening.
|Doing nothing about the unfair trade practices of Chinese aluminum extruders would have shut down approximately 100 extrusion presses across the U.S.|
The creation of the Fair Trade Act now protects the U.S. aluminum extrusion industry from the illegal and unfair trade practices of Chinese aluminum extruders, which leveled the playing field for all suppliers of aluminum extrusions to compete.
With the new law, each import requires an additional payment of tax duties, which ranges from an additional 170% to as high as 400% of the component’s original cost.
Over the past few years, we have been alerted to the circumvention of the U.S. trade orders against Chinese aluminum extrusion imports. It is clear that some Chinese exporters and U.S. importers of specific extrusion products subject to tariffs will use many means to circumvent the law and avoid paying duties. In some cases, Chinese aluminum extruders are knowingly shipping U.S.-bound extrusions through Malaysia and other countries, and re-labeling the merchandise for entry into the U.S. duty-free – a practice called transshipping.
If you are sourcing from China, keep in mind the regulations when importing aluminum-extruded components. The United States DOC is assessing significant fines, and even jail time, to those who are violating the Fair Trade Act, regardless if the purchase is by intention or because of lack of knowledge.
If you are importing extruded product, educate yourself on what is included and excluded in the Fair Trade Act, and also seek legal advice to be sure you are complying with all regulations. In the meantime, contact your Alexandria Industries’ sales person if you have any questions or need further clarification.