COUNCIL DENOUNCES CHINA FOR HOARDING COPPER SCRAP

The Copper & Brass Fabricators Council, Inc. (Washington, DC) expressed considerable concern and frustration with the Chinese government's continuing reliance upon tax policy as a means to build and sustain China's domestic reserves of copper scrap. China's Ministry of Finance announced that it will carry over from 2009 to 2010 its practice in recent years of allowing duty-free treatment of copper scrap imported into China, while imposing heavy taxes on exports of copper scrap from China.

The effect of these measures in the first instance is the draining of copper scrap from the United States to China and a greater supply of copper scrap in China for manufacture into value-added products for export. These shifts in volume mean an increase in U.S. producers' costs for copper scrap and prices for downstream products. At the same time, Chinese producers' costs for copper scrap and prices for downstream products are lowered.

Said David A. Hartquist, the Council's president and general counsel, "China has had this tax policy for a number of years now, and the severe trade imbalances being generated as a result are very disruptive and not sustainable.?

Hartquist noted that anyone attempting to export copper scrap from China in 2010 would be assessed an export tax of 15 percent ad valorem as well as a value-added tax of 17 percent ad valorem.

"As easy as China has made importation of copper scrap by not charging any import duties," Hartquist added, "the Chinese government's imposition of prohibitively high export taxes equal to 32 percent of the copper scrap's value ensures that there are virtually no exports of this valuable raw material from China. The Council is reviewing this situation very closely for possible violations of China's international legal obligations at the World Trade Organization.?

The Copper & Brass Fabricators Council, Inc. is headquartered in Washington. Its members are the principal brass mills in the United States and together account for approximately 85 percent of U.S. production of a wide range of semi-fabricated, copper-based products, including plate, sheet, strip, foil, bar, rod, pipe and tube.