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