[SMM Analysis] what is the impact of Indonesia's plan to impose "protective" tariffs on aluminum foil on China's aluminum foil export market?

Event review:

On October 11, 2018, Indonesia informed the World Trade Organization (WTO),) that it had launched an investigation into the safeguards of aluminum foil on October 9, 2018, covering the situation of aluminum foil products involved in the country from 2015 to 2017.

On 29 October 2018, KPPI held a public hearing at the beginning of the investigation;

On 7 February 2019, Indonesia again sent a message to the WTO claiming that it had found that the increase in imports had caused serious harm and threat to it in its investigation of aluminum foil safeguards.

In a February 7 filing, Indonesia said that because the applicant did not produce the same type of aluminum foil with the Indonesian tax number 7607.19.00 between 2015 and 2017, the only product involved in the case was aluminum foil with the Indonesian tax code 7607.11.00. The Indonesian tax No. 7607.11.00 is described as aluminum foil (with or without backing) with a thickness not exceeding 0.2mm and unprocessed after rolling.

KPPI said that after investigation, the import volume of aluminum foil involved in the case increased significantly from 2015 to 2017, of which China was the country with the largest import volume and increased year by year, accounting for 92.4 percent of all Indonesian imports in 2017. It has severely squeezed the market share and sales profits of domestic aluminum foil manufacturers in Indonesia. KPPI also stressed that during the safeguards investigation, Indonesia involved in the case of aluminum foil production and sales continued to decline.

In addition, KPPI analysis, Turkey and the European Union countries against China's double countermeasures led to China's exports of aluminum foil to Indonesia, China's aluminum foil production has been increasing over the past three years, but its domestic market has not digested all the additional increments.

KPPI concluded in the document that after excluding interference factors such as lack of production capacity, poor export data and malicious competition in the industry, the main reason for the normal development of Indonesia's domestic aluminum foil industry is the sharp increase in aluminum foil imports. As a result, KPPI proposed to WTO to impose protective tariffs on aluminum foil in China for a period of three years, 22 per cent in the first year, 18 per cent in the second year and 14 per cent in the third year.

What is the impact of Indonesia's move on China's aluminum foil export market? According to SMM statistics, China's total aluminum foil exports from 2015 to 2017 were 4.4807 million tons. According to the data provided by KPPI to WTO (see figures 1 and 2), China exported aluminum foil to Indonesia between 2015 and 2017 as shown in the figure below. In 2018, China exported a total of 61490 tons of aluminum foil to Indonesia, accounting for only 5 per cent of the total aluminum foil exported in 2018. SMM believes that Indonesia's move to impose protective tariffs on China will not have a greater impact on China's aluminum foil export market, but in recent years, a number of countries have imposed anti-dumping sanctions on China. Including the United States, Mexico, India, the European Union, Turkey and so on, it seems that overseas has formed a trend of action, the follow-up need to continue to pay attention to whether more countries impose relevant sanctions on China, pay close attention to the international trade situation.

Figure 1 Total imports of products involved in the case provided by KPPI to WTO from 2015 to 2017

Figure 2:KPPI countries with the top three imports of products involved in the case provided to WTO from 2015 to 2017

Figure 3: total export statistics of China's aluminum foil products from 2015 to 2018

Figure 4: statistics on the total amount of aluminum foil exported to Indonesia from January to December 2018

Attached: two related documents sent by KPPI to WTO, encoded as G/SG/N/8/IDN/21 G/SG/N/10/IDN/21 and G/SG/N/6/IDN/29.

Original file query address: https://docs.wto.org/dol2fe/Pages/FE_Search/FE_S_S006.aspx?MetaCollection=WTO&SymbolList=&Serial=&IssuingDateFrom=&IssuingDateTo=&CATTITLE=aluminum+foil&ConcernedCountryList=&OtherCountryList=&SubjectList=&TypeList=&FullTextHash=371857150&ProductList=&BodyList=&OrganizationList=&ArticleList=&Contents=&CollectionList=&RestrictionTypeName=& PostingDateFrom=&PostingDateTo=&DerestrictionDateFrom=&DerestrictionDateTo=&ReferenceList=&Language=ENGLISH&SearchPage=FE_S_S001&ActiveTabIndex=0&languageUIChanged=true#