WASHINGTON DC, BRUSSELS, MONTREAL and TOKYO , July 18,
2024 /CNW/ - The aluminium associations of
the United States, Europe, Canada, and Japan welcome a new report by the Organisation
for Economic Cooperation and Development (OECD), Quantifying the
role of state enterprises in industrial subsidies.
The report notes that while state ownership is not problematic
in and of itself, there is clear evidence that industrial
subsidies, including below-market finance, tend to increase with
the extent of state ownership. State enterprises are also more
likely to benefit from favorable application of competition rules,
public procurement practices, and forced technology transfers.
As in previous work, the OECD highlights the role of state
enterprises as major recipients of industrial subsidies, but
this report also documents state enterprises as major
providers of support. Provision of below-market energy
inputs by state utilities is common in some energy-rich countries,
while below-market finance by state banks is a widespread subsidy
instrument in China. This is an
important new insight for governments striving to level the playing
field and ensure fair competition globally. Viewing government
support as an ecosystem in which support flows in multiple
directions and fundamentally reshapes markets poses challenges [to
current approaches to multilateral rulemaking] but may open the way
for more comprehensive solutions to the multiple market distortions
engendered by support to and through state enterprises.
This new report builds on previous OECD analysis of government
support provided to aluminium firms which found that, globally,
industrial subsidies hugely favored Chinese aluminium firms. Of
US$ 70 billion provided to seventeen
of the largest aluminium companies between 2103 -17, 85% went to
just five Chinese-owned firms. Subsequent OECD analysis examined
below-market finance provided by governments to thirty-two major
aluminium companies. That report estimated support to range between
4-7% of the annual revenue of Chinese firms, compared to support of
just 0.2% of the annual revenue of other firms. Over the past
twenty years, as China's share of
global aluminium production grew from 8% to 58%, its share of the
industry's total CO2 emissions grew from 12% to 71%.
In welcoming the report, Charles
Johnson, President & CEO of The Aluminum Association,
Paul Voss, Director General of
European Aluminium, Jean Simard,
President & CEO of the Aluminium Association of Canada, and Yasushi
Noto, Executive Director of the Japan Aluminium Association
noted while recommending to their governments the need to intervene
in order to sustain an actually threatened industrial base:
"We fully support all efforts by our governments to update
multilateral trade rules and effectively address the non-market
practices of state enterprises in global aluminium markets. We
welcome the commitment of G7 Leaders in Apulia to advancing free and fair trade,
a level playing field, and balanced economic relations, while
updating and strengthening the multilateral rule-based trading
system, including through the introduction of new trade defence
instruments where necessary, with the WTO at its core."
"But until such time as there is a global level playing field
and fair competition in aluminium markets, we urge governments to
apply trade defense measures to enable the survival of our
otherwise competitive industrial base."
"On behalf of our member companies and the 1.75 million workers
they directly and indirectly support across the United States, Europe, Canada, and Japan, we remain committed to working with
governments and with international organizations to ensure
widespread availability of responsibly and sustainably produced
aluminium."
About the Aluminium Association of Canada
(www.aluminium.ca/en)
Founded
in 1990, the Aluminium Association of Canada (AAC) represents the three Canadian
world-class aluminium producers: Alcoa, Alouette, and Rio Tinto.
Operating nine smelters in Canada,
eight of which in Quebec, they
employ over 8,500 workers, producing more than 80% of North America's primary metal, with
$10.2 billion in exports, mainly to
the United States. The AAC and its
members are active in the development of best practices in health
and safety and responsible low CO2 production. For more
information, visit http://www.aluminium.ca or Twitter
@AAC_aluminium.
SOURCE Aluminum Association of Canada