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August 2004

Government Delivers a Blow to Brass and Bronze Industries

Washington— A U.S. metals industry executive characterized the Commerce Department determination, which cites no need for controls or monitoring of exports of copper-based scrap, as an affront to U.S. manufacturers, U.S. workers and the interests of U.S. national security.

The government decision was in response to a “short supply” petition filed by two metals industry groups that blames China and its insatiable demand for copper-based scrap as the root cause of a dwindling domestic supply and sharp price increases in recent years. The major consumers of copper-based scrap — the brass mill industry and brass and bronze foundries — have been particularly hard hit by the scarcity and high prices in the U.S. market. “We are completely baffled at how Commerce could analyze the data we presented and then determine that no crisis exists,” explained Joseph L. Mayer, president and general counsel of co-petitioner Copper and Brass Fabricators Council, Inc. (CBFC).

In a strongly worded statement, Mayer charged that the decision protects the windfall profits of a few dozen scrap dealers at the risk of fatally weakening a major basic U.S. industry. “The copper and brass industry provides essential products for every building, every piece of transport from airplanes to submarines, and for the electronics and electrical segments of our high technology industry,” Mayer stated. “More importantly, every one of these applications has a military counterpart. Every round of ammunition, every artillery shell, every armored vehicle can only exist because of the brass mill products they contain.”

“Today the U.S. government handed over to China a vital U.S. industrial and national defense raw material enabling them to continue expanding their grotesque trade advantages with America,” Mayer concluded.

China’s trade surplus with the U.S. is approaching $150 billion per year, a bilateral trade differential unprecedented in the history of the world.

In a related development, the European Association of Metals recently submitted assessments to the European Commission detailing how subsidization and other biased operating schemes practiced by China benefit its copper producers to the detriment of European Union non-ferrous metals industry. One assessment suggests that the formerly sound and balanced operation of the international non-ferrous scrap market, based on sustainable supply and demand, is now in complete disarray due to China’s trade policies.

The data contained in the petition demonstrate that essentially all of the growth in U.S. exports of copper-based scrap in recent years has been attributable to rising consumption in China. In 1999, the U.S. exported 86,601 metric tons of copper-based scrap to China, which accounted for just 27% of total U.S. exports. In 2000, the volume was 214,162 metric tons or 43% of total exports. During 2001, U.S. exports of copper-based scrap to China rose to 316,739 metric tons or 56% of total exports. Another jump occurred in 2003 when 532,901 metric tons of exports to China represented 71% of total U.S. exports.

The Copper and Brass Fabricators Council, Inc., headquartered in Washington, D.C., represents U.S. manufacturers of a wide variety of products fabricated from copper and copper-alloys. The industry as a whole is referred to as the “brass mill industry.”

Co-petitioner Non-Ferrous Founders Society in Park Ridge, Illinois, includes the principal brass and bronze foundries in the U.S., which are consumers of copper-alloy ingot that typically is 95 percent derived from copper-alloy scrap.

David A. Hartquist, an international trade attorney with the Washington, D.C. law firm Collier Shannon Scott, PLLC, serves as lead counsel to the petitioners.

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