A Canada-U.S. trade fight over aluminum appears to be over before it really began.
The United Steelworkers union abandoned efforts on Friday to get the U.S. government to impose steep tariffs on aluminum imports, blaming a lack of industry unity. Earlier this week, the labour union petitioned the Obama administration to put an emergency tariff of up to 50 per cent on all imports – a move that could have sideswiped Canadian producers, including Rio Tinto.
But the union abruptly withdrew the petition in the wake of outrage from the Canadian government, rival unions and North American aluminum producers.
"Our goal was to address the root cause of the problem that has devastated aluminum production and employment in the United States: China's overcapacity, and its predatory and protectionist trade policies," said Leo Gerard, the union's international president. "Many in the industry refused to support the case."
Mr. Gerard accused unnamed "parties" of putting their "short-term interests over the long-term viability of the sector."
Nonetheless, the aborted effort has "sparked long overdue discussions" about the plight of the industry, he said. Mr. Gerard now says the union will push governments to work together to "foster a fair and stable market."
Canadian trade minister Chrystia Freeland applauded the reversal, pointing out that Canada and the U.S. have "well-developed supply chains that depend on the free flow of trade and the removal of barriers."
Roughly three-quarters of U.S. aluminum smelting capacity has been idled or shut down since the financial crisis in face of low world prices – a problem the union blames on a flood of cheap Chinese aluminum on world markets.
Canada supplies two-thirds of U.S. aluminum imports – an export market worth nearly $4-billion (U.S.) a year to Canada.
A spokesman for Rio Tinto also welcomed the repeal of the petition, which he said would have hurt its Canadian operations and disrupted North American supply chains. "We must face challenges together, not risk unintended consequences that ultimately impair our ability to compete globally," Rio Tinto spokesman Bryan Tucker said.
Rio Tinto, which acquired Montreal-based Alcan in 2007, is Canada's largest aluminum producer with five major smelters (four in Quebec and one in B.C.) and minority stakes in two more Quebec smelters. It produces nearly two tonnes of aluminum in Canada – much of it exported to the U.S. for use in cars, aircraft, cans and various building products.
The United Steelworkers filed the petition, invoking a rarely used and controversial U.S. trade remedy known as Section 201. The last time the U.S. imposed Section 201 duties was in 2001, when then-president George W. Bush hit various steel products, including Canadian steel.
The union insisted that the tariff could have been applied in a way that would have protected Canadian-made aluminum, while targeting China. "We're not going to let anything bad happen in Canada," Mr. Gerard said in an interview earlier this week.
Ottawa, Rio Tinto and even rival union Unifor, which represents hundreds of Quebec aluminum workers, had reacted with shock to the tariff threat. Unifor official Renaud Gagné called the original petition "incomprehensible," pointing out that it would have hurt both Unifor and United Steelworkers members in Canada.