Industry Update: Aluminum Trade Practices Nicole January 16, 2018

Presenters T. Nicole Vasilaros, Esq. Vice President, Federal and Legal Affairs National Marine Manufacturers Association Kristin Mowry Jeff Grimson Nicole Specialists in unfair trade cases/import compliance matters affecting U.S. end users/manufacturers Representative Clients: National Association of Home Builders, Flexible Packaging Association, Kitchen Cabinet Manufacturers Association, International Wood Products Association, American Home Furnishings Alliance, Retail Industry Leaders Association Target, Home Depot, Ashley Furniture, Fortune Brands

Tariff Act of 1930 Allows for the investigation by the U.S. Department of Commerce and U.S. International Trade Commission (ITC) to assess unfair trade practices Criteria: 1. Is the import being sold at less than “fair value” and/or 2. Does the import benefit from illegal foreign government subsidies ITC examines whether imports are having a negative impact on the domestic industry Can lead to steep duties and market disruption Nicole

Background On November 28, 2017, Secretary of Commerce Wilbur Ross announced the “self-initiation” of an unfair trade case against Common Alloy Aluminum Sheet from China “Self-initiation” means the case was not started after the filing of a complaint by a domestic industry Very rare (last ones were almost 30 years ago) 1xxx, 3xxx, 5xxx aluminum sheet Nicole

International Trade Commission Quasi-judicial commission 6 Commissioners typically (currently at 4) Determination: Is there injury to domestic producers? Up or down vote Jeff/Kristin

Department of Commerce Executive branch agency Measures the level of dumping or subsidization by exporters Conducts independent investigations of dumping and countervailing duty Jeff/Kristin

What is “dumping” and “countervailing”? Dumping = Less than fair market value as compared to sales price in home market or constructed value Countervailing = a government financial contribution that confers a benefit to a specific industry or enterprise Ex: grants, loans, equity infusions, tax credits Jeff/Kristin

NMMA engagement timeline November 28, 2017 – Announcement of AD/CVD investigation December 2017– researched Department of Commerce actions and assess recreational marine industry vulnerability Approval from NMMA executive committee to retain specialized outside counsel Coalition formed (RVs, trailers) December 21, 2017: testified at ITC preliminary hearing December 27, 2017: submitted brief for record January 12, 2018: preliminary ITC vote Nicole

Aluminum Boating Statistics Aluminum sheet is used for pontoon boats, engines, components, trailers, etc. Growing segment of American boatbuilding: $3 Billion 8,000 direct jobs 111,000 aluminum powerboats sold in 2016– average length 19 feet, 43% market Pontoon Boats: 35,000 units sold, 14% market Boat Trailers: 205,000 units, $351 million in sales Nicole

Marine Arguments Domestic industry is not injured by imports of Chinese aluminum Volume of imports are not displacing domestic production Pricing of imports has not caused US pricing collapse Competitive pricing across other import sources and significant presence of suppliers from Korea and Greece Marine industry requires wide sheet aluminum not readily available by US producers (72in +) US mills at or near capacity and can’t meet demand Jeff/Kristin

Impact on Marine Industry Import duties could disrupt supply and raise costs for aluminum sheet from all sources Duties could kick in as early as February 1 Commerce Department’s own initial projections show duties of at least 60 percent Jeff/Kristin

US Jobs at Stake Will Harm More U.S. Jobs than it Helps! Direct Marine Manufacturing Jobs: 8,000 Direct and Other Boating Manufacturing Jobs: 12,000 Related Dealer Jobs: 10,000+ Jobs in RV, trailer and other industries: tens of thousands Domestic aluminum sheet makers: 3,700 workers Commerce Department’s “self initiation” is choosing one group of American workers over another (larger) group. Jeff/Kristin

ITC Preliminary Determination January 12, 2018: 4-0 to continue the investigation Jeff/Kristin

FASTEST ESTIMATED TIMELINE Case Timeline (Fast) FASTEST ESTIMATED TIMELINE CVD Timeline AD Timeline DOC Initiates 11/28/2017 ITC Vote 1/12/2018 DOC Preliminary Determination 2/1/2018 4/20/2018 DOC Final Affirmative Determination 4/17/2018 7/4/2018 ITC Final Hearing (predicted) DOC Issues Order (assumes NO alignment with AD) 6/8/2018 8/25/2018 Jeff/Kristin Note: These dates are projections only. Members should consult legal counsel before relying on the above dates for business decisions

Potential Results ITC votes no injury = case is terminated ITC finds injury (whether preliminary or final) = case proceeds DOC sets duty levels and will change them Duties can be retroactive The mere filing of this case is expected to have a disruptive impact on the market for all consumers of aluminum sheet Jeff/Kristin

Next Steps Encourage all affected companies to engage in the legal fight Consider testifying at the ITC’s final hearing. Key topics: inability to source adequate volumes or required specifications from domestic industry, potential substitute products (if any) or supplying countries, etc. Let NMMA know how this case is affecting you. Sometimes small impacts can be the tip of the iceberg that our legal counsel needs to understand. Jeff/Kristin

How can you help? Contact your member of Congress today! At boatingunited.com Engage in NMMA’s public relations campaign– Op-Eds, Letters to the Editor, Social Media help to get our US jobs story front and center Join us in Washington for meetings with officials on Capitol Hill and in the Administration– March 2018 Join us in Washington for the American Boating Congress– May 2017 Nicole

Please contact: Nicole Vasilaros @ nvasilaros@nmma.org 202-737-9763 Questions? Please contact: Nicole Vasilaros @ nvasilaros@nmma.org 202-737-9763