January 15, 2017 HOW NAFTA KEEPS ALUMINUM MOVING Platts Aluminum Symposium 2018 Heidi Brock President & CEO The Aluminum Association 1
WHO WE ARE The Aluminum Association • 85-year old trade association • Represent $75B + U.S. aluminum industry • Promote aluminum as most sustainable material in today’s market • 115 member companies • Represent full aluminum value chain (primary, recyclers, semi-fabricators, suppliers) • Grow markets & achieve policy outcomes 2
OUR TRADE PRINCIPLES Rules-based Global Trading System Goal Level the playing field for the full U.S. aluminum value chain to ensure robust, fair and rules-based trade of aluminum and aluminum products. Activities • Encourage U.S. government to pursue tangible and enforceable commitments from China on overcapacity. • Actively support rules-based trading system and free trade agreements that benefit U.S. manufacturers and producers. • Ensure strong enforcement of U.S. and global trade rules. 3
NAFTA 2.0 MILESTONES Quick Pace for Renegotiating Foundational Trade Agreement Negotiations Round 1 United States Negotiations Negotiations Round 5 President Round 6 Mexico Announces Canada Negotiations Renegotiation Mexico U.S. Round 3 Intersessional Presidential Midterm USTR Canada United States Elections Elections Hearing 2017 2018 May June July August September October November December January March April May June July August September October November February Target to End NAFTA 2.0 Negotiations January Negotiations Objectives Round 4 Released United States Negotiations Updated Round 2 Objectives Mexico Released 4
POSSIBLE OUTCOMES Possible Path Forward on Negotiations •Breakthrough on roadblocks, with agreement on “modernized” provisions. Quick • Clear path for implementing bill to pass Congress, and businesses can make investments. Conclusion • The parties stay at the negotiating table through Mexican and U.S. elections, and they find a compromise on controversial issues. Keep • Long period of uncertainty, but the status quo is largely maintained. Negotiating •President Trump gives “six months’ notice” for U.S. withdrawal, and uncertainty undermines North American competitiveness. • Mexico and Canada walk away from the negotiations, and tariff rates snap back to pre-NAFTA. Withdraw 5
NAFTA: KEY ALUMINUM GROWTH DRIVER Ingot U.S. Imports from NAFTA Trading Partners +93% 8.0 (Billions of Pounds) +190% Mexico 73% 7.4B 7.0 U.S. Imports NAFTA → lbs 6.0 $6.4B 5.0 4.0 Canada 6% 3.8B lbs 3.0 14% 13% 26% $2.2B 2.0 68% 1.0 Semis Scrap Canada Mexico 1993 2016 Volume Value Ingot U.S. Exports to NAFTA Trading Partners 4.0 +246% (Billions of Pounds) 3.5 NAFTA → $4.3B U.S. Exports +135% 3.0 2.5 3.2B Mexico 24% lbs 2.0 12% 14% 1.5 19% 1.4B 1.0 Canada 63% $1.2B lbs 68% 0.5 Semis Scrap Canada Mexico 1993 2016 Volume Value U.S. Census Bureau and the Aluminum Association 6
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OUR NAFTA PRINCIPLES Aluminum Industry Benefits from Modernized NAFTA • Maintain NAFTA. The Association’s member companies have benefited from robust, fair and rules - based trade of aluminum and aluminum products within the NAFTA trading region. • Promote North American manufacturing. Ensure that NAFTA incentivizes manufacturing production in the United States that sources from North American suppliers, and that the agreement’s benefits accrue to companies that invest in the region and their employees, while boosting the competitiveness of American manufacturing. • Enforce the Rules. A modernized, strong NAFTA should facilitate the efficient movement of aluminum and aluminum products within the NAFTA region while ensuring that NAFTA preferences are available only to aluminum articles that meet the agreement’s Rules of Origin. Strong enforcement of customs rules and cooperation among the NAFTA parties will allow U.S. businesses and workers to benefit from the agreement. 8
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