Israel’s Ministry of Economy and Industry Imposes a Temporary Guarantee on Aluminum Imports from China

In July 2024, the Commissioner of Trade Levies in the Ministry of Economy opened an economic investigation into the suspected dumping of aluminum profiles and rods imported from China. The commissioner opened the investigation by virtue of the authorities vested to him under the Trade Levies and Safeguard Measures Law, 1991, after receiving a complaint from Israeli manufacturers of aluminum profiles and rods. Within this framework, the commissioner recently ruled that he is imposing a temporary guarantee on aluminum profile and rod imports from China, with the objective of protecting the local industry.

Temporary Guarantee Imposed to Protect Local Industry

Import dumping is an unfair trade practice whereby products are imported at prices below the manufacturing costs or below the prices in the source market. This causes damage to the local industry because the market becomes flooded with products at anti-competitive prices. According to the World Trade Organization’s dumping agreement, countries may protect their domestic markets by imposing a dumping levy at a rate that reflects the extent of the dumping and the extent of the damage to the local industry.

During the investigation, which is still underway, the commissioner decided to impose a temporary guarantee on aluminum profile and rod imports from China at steep rates ranging between 61% and 146%, because of their import into Israel at dumping prices. According to the Ministry of Economy, the temporary guarantee should stop further damage to the local industry and prevent any increase in imports at these prices until the investigation concludes and the commissioner reaches a decision about a permanent levy.

The imposition of the temporary guarantee will create economic certainty for the local industry and the economy, prevent further damage to the local industry, strengthen employment in the sector, and promote fair competition in the aluminum industry. We further note that the Trade Levies and Safeguard Measures Law stipulates that the commissioner’s decision is subject to approval by the Director-General of the Ministry of Economy (or, at the very least, that the Director-General will not reject it), and its duration is limited to 200 days.

Balancing Protection and Competition Concerns

On the other hand, the commissioner must consider if his decision to impose a temporary guarantee (and certainly to impose a dumping levy, if ultimately imposed) on aluminum profiles and rods from China may cause a significant adverse impact on imports of these products to Israel due to the price hikes, in a way that, in turn, could result in harm to competition and to the public in Israel. Therefore, the commissioner must ensure that he strikes an appropriate and fair balance between protecting local manufacturing and the harm to competition that could derive from such a levy.

Strategic Context and Geopolitical Considerations

The decision to impose the temporary guarantee emphasizes the fact that the regulatory authority is not fence-sitting during the intense global trade war currently underway, but rather is jumping into the battlefield. This position is reflected, firstly, by the fact that the Commissioner of Trade Levies stated publicly that the world is now a global battlefield and that countries must protect their manufacturers from unfair trade.

Secondly, alongside the reasonable course of action designed to protect the local industry, we cannot ignore the fact that the commissioner decided to impose the temporary guarantee specifically on Chinese manufacturers. At a time when the trade war between the United States and China is only intensifying, the commissioner’s decision to impose this hefty temporary guarantee may also reflect Israel’s efforts to align its trade policy with that of the United States, considering the United States has imposed a 25% tariff on all aluminum imports from all countries, and just recently canceled all exemptions that applied.

Ostensibly, the provision in the Trade Levies and Safeguard Measures Law that anchors the commissioner’s authority to impose a temporary guarantee does not allow him to take foreign policy considerations into account and focuses only on preventing potential damage to the local manufacturing sector. However, it is conceivable that in times when international trade has become a “global battlefield,” as the commissioner himself called it, he cannot afford to completely ignore foreign policy interests.

Summary and Recommendations for Market Participants

In the current state of affairs, it could be that imposing a dumping levy or the temporary guarantee on imports from China may be an easy fix. At the same time, it may prompt sectoral regulatory authorities to be more attentive to local manufacturers’ allegations against Chinese imports. In any case, importers and exporters and domestic and foreign manufacturers should carefully examine the provisions of the Trade Levies and Safeguard Measures Law in order to see how they can use them to their advantage and serve their economic interests, considering the current economic and geopolitical situation.

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Professor Amichai Cohen is a Special counsel on International Law in the firm.