EU aluminium duty cut to 3% published in Official Journal

A European Union regulation cutting the import duty on unwrought aluminium to 3% from 6% was published in the Official Journal of the European Union on Wednesday, and will enter in to effect on May 12 -- the third day following its publication.

The wording of the council regulation stated: "This partial suspension of the autonomous customs duty for unwrought, not alloyed aluminium is appropriate to balance the economic interest of the operators concerned."

The regulation stated that taking into account possible future changes in the market situation of unwrought, not alloyed aluminium, "a review should be foreseen after three years of the entry into force of this Regulation."

"This Regulation shall enter into force on the third day following its publication in the Official Journal of the European Union," it said, adding that the regulation should be binding in its entirety and directly applicable in all Member States.

REGULATION SEEKS TO BALANCE ECONOMIC INTERESTS IN ALUMINIUM MARKET

The document stated that with the enlargement of the European Union the number of small and medium sized enterprises using unwrought, not alloyed aluminium for the production of semi-finished and finished industrial goods had significantly increased. "Furthermore, the market situation within the European Union has significantly changed due to takeovers of Community industries by global industrial holdings and further concentration of manufacturers of aluminium on the world market," it said, adding that at the same time costs for electricity, an important cost factor in the production of not alloyed aluminium, had dramatically increased and the development of the world economy had led to a shortage of supply of raw aluminium.

"These factors have lead to a significant increase in prices for raw aluminium and excluded to a very large extent independent small and medium sized users of not alloyed aluminium from duty free purchases of this product," the regulation stated, adding that the payment of customs duties of 6% for the basic raw material had therefore the effect that the competitiveness of such companies was at risk and created the danger that a larger number of these companies would not be able to survive.

DUTY CUT AIMS TO PROMOTE EU SME COMPETITIVENESS

The EU council document said the elimination of these companies from the community market would certainly reduce competition for semi-finished aluminium products on this market. "In addition such elimination would have negative effects on the employment in the Community especially in some rural areas of the new Member States," it said, noting that the partial suspension of the customs duty for non-alloyed aluminium would therefore improve to a certain extent the competitiveness of the SME and thus improve the competition for semi-finished and finished aluminium products on the Community market.

The EU said this situation had to be weighed against the impact of a customs duty suspension on the manufacturing plants of unalloyed aluminium which still existed within the community and in countries with a preferential tariff arrangement with the European Union.

"Almost all these plants belong either directly or indirectly to major industrial holdings located outside the European Union. The aluminium produced in these plants and supplied duty free is mainly used for further transformation within companies linked to these holdings," it said.

The regulation noted that only a "relative small share of duty free non alloyed aluminium is made available to independent SME. Nevertheless taking into account the relative high level of the conventional rate of customs duty of 6% the autonomous partial suspension of this duty will have an impact on the profitability of the production and the subsequent transformation operations of these companies due to an increased price pressure on the products resulting from transformation as well a