By Andrea Shalal
WASHINGTON (Reuters) - Proposed U.S. tariffs against the European Union over aircraft subsidies could concentrate market control over some supplies of copper alloy in the hands of a German-owned company and hurt American businesses, U.S. industry players said on Monday.
The United States has proposed a $25 billion (£20.6 billion) list of European imports facing 100% tariffs once an arbitrator from the World Trade Organization later this year determines the damages caused to U.S. airplane maker Boeing Co (N:BA) by government aid to its European rival Airbus (PA:AIR).
Washington has sought WTO permission to impose tariffs on $11.2 billion worth of EU imports annually to compensate for damages, but the WTO number is likely to be lower.
Over a dozen metal suppliers and processors testified at a USTR hearing on Monday that the proposed tariffs would hit copper alloys as well as everything from aircraft parts to Italian cheese.
Many witnesses urged USTR to drop the copper tariffs, which they said would raise the cost of materials used by the automotive, energy and telecommunications sectors, potentially triggering layoffs.
The main beneficiary of the copper tariffs would be Wieland Werke AG, a Germany firm, since it last month completed its acquisition of Illinois-based Global Brass and Copper Holdings Inc (MX:BRSS), which was a dominant player in the U.S. market, several witnesses told the USTR committee.
U.S. companies stopped producing certain copper alloys several years ago following a sharp decline in the global copper market.
Wieland had proposed producing such alloys in the United States, but the profits would ultimately flow to Europe, they argued, noting that Wieland had already blocked sales to certain U.S. customers.
"These proposed tariffs, if enacted, will create a monopoly for a German-owned mill at the expense of the remaining American-owned copper-based metal suppliers and fabricators," Charles Bernard, president of Eagle Metals Inc, said.
Olin Brass, a unit of Global Brass and Copper and now part of Wieland, had urged USTR in May to add the copper products to its list of EU imports facing possible tariffs. It argued that there was excess capacity in the U.S. market, and raising the cost of EU imports would allow it to revive domestic production.
But Nancy Rosenthal, president of a small Brooklyn-based company named Rotax Metals, told the committee it would take too long to rebuild U.S.-based manufacturing and get those products certified, and costs would shoot up if tariffs were imposed.
"Very bluntly, imposition of this tariff would put businesses like mine and my customers out of business," said Rosenthal, who now runs a firm first founded by her father-in-law in 1947 after he fled Germany's Nazi regime.
She told Reuters after her testimony that the European tariff would increase pressure at a time when her costs had already gone up due to a 25% tariff on certain Chinese supplies, of which she had only been able to pass on 10% to her customers.
But Dale Taylor, president of Wieland Rolled Products North America, rejected the concerns about the time involved and quality, and said the switch could be completed fairly easily.
Franziska Erdle, director general of WirtschaftsVereinigung Metalle, the umbrella trade group that represents German metals producers and processors, said her organisation also opposed the tariffs, although Wieland is a member.
She declined to comment further.