Opposing quotas

Robert Budway, president of the Can Manufacturers Institute, has written a letter to the President of the US, opposing the quotas on aluminium and steel:

Dear Mr President:

The Can Manufacturers Institute (CMI) strongly opposes the adoption of aluminium and steel quotas or tariff rate quotas in future trade agreements with our trading partners Mexico, Canada, the European Union, Japan, and the United Kingdom. This letter is in response to Secretary Perdue’s comment to the House Committee on Agriculture on February 27, 2019 that US trade negotiators are working to replace aluminium and steel tariffs with “reasonable quotas Canada and Mexico can live with”.

Our members have witnessed how steel quotas in trade agreements can be harmful. The quota which has been applied in the South Korean bilateral trade agreement has distorted the tinplate market to a significant extent. If quotas are imposed on our trading partners, our industry will be unable to procure enough primary aluminium and tinplate steel to produce cans to package the variety of foods and beverages Americans need to meet their basic nutritional needs.

American can makers rely on a mix of foreign and domestic primary aluminium and tinplate steel especially from Canada and Mexico for their manufacturing needs. The supplies of domestically produced tinplate steel and can sheet aluminium are extremely limited. In 2016, domestic tinplate production was only 1.2 million tons and US demand was 2.1 million tons, US tinplate makers were only able to supply, at most, 58% of the requirements of domestic can manufacturers. To produce aluminium packaging, primary aluminium is not widely available in the United States and must be imported mainly from Canada. Due to the lack of an adequate domestic supply, our members have had no choice but to source tinplate steel and primary aluminium from foreign countries.

CMI is the national trade association of the metal can manufacturing industry and its suppliers in the United States. The can industry accounts for the annual domestic production of approximately 119 billion food, beverage, aerosol and general line cans; and employs more than 22,000 people with plants in 33 states, Puerto Rico and American Samoa. Our industry generates approximately $17.8 billion in direct economic activity. American-made aluminium and steel packaging reigns as the supreme choice for US and international customers.

CMI urges you to protect the American food supply and to reject quotas on tinplate steel and primary aluminum.

Sincerely,

Robert Budway

 

Editorial comment:

Whatever you say about the president, he remains unflappable against widespread condemnation of his steel and aluminium tariffs. Let’s face the facts. In 2016, domestic tinplate production was only 1.2 million tons and US demand was 2.1 million tons. US tinplate makers were only able to supply 58% of the requirements of domestic can manufacturers; that’s a massive shortfall.

To soften the blow, Trump’s administration is examining replacing the tariff with a quota, which would restrict how much US steel companies can buy from Mexico and Canada. In theory this is commendable to boost US growth within the sector, however the simple fact is that US industry wouldn’t be able to keep up with such a demand.

In this day and age, steel and aluminium is a global trade, and any quota would be just as, or if not more damaging to the US economy, and the wider metal packaging fraternity. Added to the fact that the US imports a large amount of its oil supplies from Mexico and Canada, and natural gases, and you’re left with a situation where it’s tit for tat.

This publication applauds the CMI for its lobbying effort and let’s hope the Trump administration sees sense before the 82,000 American manufacturing jobs in these industries are put under duress.

A dangerous game of poker is being played, where it seems for now there are no winners, only losers.

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