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Project for 2007-2008

Seven years down the track from the foundation of our association, we can state that today, FACE is a substantial element in the European aluminium world and it has become a precise and influential reference point of the official institutions of the European Union, of member state governments, of the industrial sector and of specialised media.

FACE has endeavoured to maintain the liberalization of the primary aluminium market constantly in the agendas of the EU Commission and Governments and has managed to do so despite the strong opposition of the major integrated multinational producers, of the big international traders, of the refiners and of other European associations all leagued against the reduction or the elimination of the 6 % duty and against bilateral concessions towards the GCC.

The enormous disproportion of financial means, economic power, operational capacities and political influence between the pro-duty block and FACE has not prevented our organization from gaining support and credibility despite the initial scepticism of Brussels-based and other European institutional, industrial and political circles.

Before the constitution of FACE, the situation was something like this:

- The private non integrated companies of the aluminium production chain did not have a specific representative voice in Europe, since the associations of the sector such as the EAA and Eurometaux , were substantially controlled by the large multinational producers of primary metal; a similar situation cropped up in numerous national associations even if on a lower scale;

- Therefore there was total and complete opposition in Europe to the elimination or reduction of the 6 % duty, because the Commission and the EU Governments were fed exclusively with factious and distorted arguments by the primary integrated companies and the associations controlled by these groups;

- The bilateral Free Trade Agreement (FTA) negotiations relating to the liberalization of raw material, solicited by the Gulf Countries Cooperation (GCC) to the European Union offered them only an annual duty free quota of 50,000 tons of aluminium; nevertheless, the lobby by the multinational companies imposed a very conservative formulation to the hypothesis of the agreement, requesting for example the clause of a long transitional period of 8 years after the eventual signing of the agreement, before the possibility of a preferential status limited to the above mentioned quota;

- as far as the WTO activity is concerned, primary aluminium and raw materials had been excluded from the Agenda of all the rounds previous to the Doha one, for more than 40 years.

The actions of FACE have given space and a voice to the needs of the non integrated transformers and final users of aluminium in Europe, and in particular they have brought the question of the duty of primary metal to the attention of the institutions and the media, making sure that the topic be included in all the main agendas: 

- Suspension: public commitment by the Trade Commissioner to eliminate the duty in a phased way. The temporary reduction of the duty to 3% limited to unwrought primary metal became feasible from May 2007 with the support of all EU Governments. 

- EU-GCC for the FTA bilateral agreement: full and immediate duty-free status granted to the GCC for all types of primary aluminium by the European Union, officially confirmed at Ministerial level. Preferential treatment to be applied soon after the signing of the Agreement. 

- WTO: for the first time since 40 years, the liberalisation of raw materials is part of a WTO Round’s Agenda and has being discussed with more than 50 countries, at the initiative of the UAE under a DUBAL-sponsored proposal, with the support and the technical cooperation of FACE.

The following notes summarize the achievements of FACE, the advantages it brings to its members and also the critical elements for the future and proposes an action-plan for 2007-2008 in view of strengthening the organisation and increasing the benefits that can be drawn by its members.

I. Achievements and assets of FACE

A – In the European Aluminium Industry 

- FACE has given a specific visibility and a voice to the European independent aluminium non integrated transformers and final users, becoming an organisation of reference for this sector of the European aluminium industry; 

- FACE’s studies, data statistics and market analysis have completely redefined (and often initiated) the perception of independent non integrated transformers and final users of aluminium in Europe, highlighting their economic and social role and importance amongst European business and political circles; 

- FACE has ended the monopoly of (mis)information and influence enjoyed for decades by the protective umbrella associations which were controlled by the big primary producers; 

- Thanks to the direct action of FACE independents now are for the first time in decades represented in the board of the European Aluminium Association (EAA). Since this measure was voted by EAA’s General Assembly, there have always been FACE members in the Board of EAA and as EAA’s Committees Chairmen; 

- FACE’s interventions have allowed independents to monitor, anticipate, influence and promote compromises in the decision-making processes of European institutions and associations of the sector (as was the case in the compromise in the suspension of the duty agreed in the final stages with EAA and Eurométeux; 

- FACE has created a community of companies with a sense of solidarity having many common interests and has established a way ahead of time the concept of loyal partnership with a new class of non-EU primary aluminium producers, substantially without downstream integration such as Dubal, Comalco, and Rusal, and with big independent European transformers such as Novelis to ensure stable and competitive sources of supply and technological cooperation in order to give continuity to the development of applications in aluminium in a Europe, which (for better or for worse), is destined to loose the influence of the historical multinational companies.

B – At the level of the European Commission 

- FACE became a trusted institution which has rooted the needs of independent transformers in the mental mapping of EU decision-makers, balancing their traditional pro-big business tendencies. 

- FACE has been regularly consulted on policy issues and continues to participate into such processes. FACE has been consulted for the EU requirement’s on Russia’s WTO accession, for the mergers of Alcan-Pechiney-Alusuisse (A.P.A.); FACE also participates into the Commission’s consultation on it’s new policy for the aluminium industry. 

- FACE has contributed to neutralize EUROMETAUX and EAA’s requests to the Commission of no concessions on primary aluminium in the EU-GCC Free Trade Agreement. 

- FACE has also prevented EUROMETAUX and EAA from presenting the Alcan-Hydro-Alcoa-Corus WTO position to EU Authorities as such (strong and unrealistic conditions for any tariff reduction; in any case tariff phasing-out over a transitional period of not less than ten years after the end of the WTO Doha Round). 

- FACE has successfully managed to include in EUROMETAUX/EAA’s WTO Statement a reference to a possible duty elimination and paragraphs reflecting specifically, for the first time in an EUROMETAUX/EAA official statement, the interests of EU independent aluminium transformers, when presented to the EU Commission. 

- FACE progressively got the support of the Directorates for Industry, Competition and Trade of the EU Commission on the need to liberalize the European market, to pay more attention to the situation of SME’s and to allow for a better and more competitive access to raw materials (as reflected in several official speeches published by the EU Commission). 

- FACE has got the active support of the Trade Commissioner Peter Mandelson for it’s case; as well as the one of the Commissioner for External Relations, Mrs Benita Ferrero-Waldner, a support also extended for the conclusion of the EU-GCC FTA negotiations.

C – At the level of the EU Member States 

- FACE has got the support of up to 20 EU Governments for the full suspension of the 6 % duty in the course of the past years. 

- FACE has developed close working relations with Governments that have constantly – and at Ministerial level – defended the reduction/elimination of the duty on aluminium and also the favourable conclusion of the EU-GCC FTA negotiations. In particular the British, Italian and Austrian Governments, as co-sponsors of our proposals. FACE has also closely cooperated with the Czech Government for their own request. 

- FACE’s official views on the link between competitiveness and access to raw materials have been approved by the EU Competitiveness Council (Governments + Commission).

II. Vulnerabilities of FACE

A – Membership

Over the years the number of FACE members has diminished for many reasons: some companies have shut down, some have been purchased by multinational companies, some have had difficulties doing association marketing outside of Italy, the modest response to the wide range of services offered to members, the length of the lobbying campaign, lack of lobbying culture by the majority of members, especially by the smaller companies, the relatively burdensome and naturally slow bureaucratic process. Notwithstanding this it must be considered a success the solidity of the association which has demonstrated continuity and perseverance for a relatively long period of time. Today results have been achieved. They are tangible, a mechanism which seemed impregnable is beginning to break down. The road to complete the operation and impose new initiatives is better known now and all this should ensure new enthusiasm to confirm memberships and to welcome new companies to whom we should illustrate in the best way the work carried out for our future objectives.

B – Financing

Up until today, FACE has been able to move and survive thanks to the prominent economic support of Dubal who shares with the SMEs the common interest of abolishing the duty on metal. As mentioned above, the modest number of FACE members reflects the general phenomenon especially amongst SMEs to invest in new associations such as FACE, when they already have a consolidated list of contributions to associations, Chambers of Commerce, industrial associations etc. We must note that even EAA and Eurometaux and national associations such as Assomet in Italy, have the same difficulties, and in fact these organisations have always been living in the past due to the powerful support of the large multinational companies; this means that it is very difficult for FACE to continue to exist and operate with the constant costs of lobbying actions conducted with continuity and professionalism without the direct support of one or a few large supporters. It is impossible to gain political influence without adequate means, and without political influence, there can be no solid lobbying activities, the companies risk not being able to defend their own interests efficiently.

III. Proposals of actions for 2007-2008

A – Suspension of the duty

Having obtained the first result in the reduction of the duty to 3% on primary non alloyed unwrought metal, FACE has planned diverse immediate plans of actions: 

- To continue lobby activities for the completion of the plan of the Trade Commissioner Peter Mandelson, which is to totally remove the duty (0%) on unwrought primary metal. The Commissioner proposes to eliminate the duty on all types of primary metal (including alloys) as soon as the EU-GCC FTA will be signed. To speed up the process, diverse strong actions are therefore necessary, such as the appeal to Ombudsman, the request for intervention by the General Director of Competitiveness and/or the EU Antifraud body OLAF and an incisive press campaign. The activities on this front should be strong, quick and continuative to better exploit the good results obtained. FACE will yet again be present when the anti-trust authorities start examining the next mergers (for example Alcan-Alcoa). Face will request the total abolition of the duty as a condition to accept new concentrations in the market.


Continued support of FACE through its channels for the quickest implementation of the preferences of the EU-GCC FTA (“provisional application”) and for the UAE-lead WTO negotiation on the liberalisation of raw materials. If the WTO Doha Round collapses completely, and if the UAE decides to propose a separate WTO multilateral agreement on raw materials, FACE could support this initiative. Also following this line, the activity should be strong, quick and continuative.

C – Technology Platform

The progressive disengagement of the large multinational aluminium companies from the European theatre brings about risks for the downstream system especially concerning the promotion of our metal, both in terms of image and in terms of research in continued technical and technological improvement of products. Even the EAA is faced with similar problems to the extent that over the last few months it has organised a specific task force to understand the will and the needs of its members and of the market.
The lack of structures does not allow for a direct commitment by our association on the management of complex topics of this nature, however FACE can help its members find channels to face the problems in a better way (mapping of universities, research centres, centres of excellence, collection of data on initiatives at community levels or national levels). The desirable expansion of the associative base of FACE with other large companies with similar importance to that of Dubal such as Novelis or Rusal, could also give a push to the definition of the technology platform to which our members can participate. It is in fact indispensable in a few key sectors, like transport and building, that the development of applications in the coming years be planned and defined in tight cooperation between metal producers and downstream companies. The eventual individualisation of an adequate technology platform that meets the needs of FACE members will give our association a new competitive edge and an even higher role in our industrial system to the benefit of the SMEs.

D – Membership:

Face should be in a position as of September 2007 to start with an intense membership campaign to ex-members and to potential new ones through the usual low cost direct contact channels, and with the aim of attracting companies such as Novelis, Aleris, Rusal, Comalco etc. Good communication on the validity of the results obtained and on the concrete future strategies, if put into action at the right time, should facilitate the associative expansion, keeping in mind that this will require dedicated human resources and finance. Furthermore, in order to continue increasing its influence, FACE should continue pressing for its own membership in Eurometaux.

E – Financing

The choices of the strategies individualised for FACE will depend on the finances needed in order to be operative. It is needless to be reminded, as it is universally known, that lobby activities at high levels are costly and do not allow for half measures. As previously stated we need to get more members even if SMEs are difficult targets, but the long term survival of FACE is dependant on the presence of one or more large companies able to act as sponsor of the association.

Conclusion : the value of FACE

There is no doubt that the future of the aluminium system in Europe is more and more reliant on downstream transformation and manufacturing. There are no doubts about the fact that today FACE is the only independent organisation in the sector that can represent and defend the needs and interests of independent non integrated downstream transformers and final users without compromises. The progressive growth in the importance of this part of the aluminium system, at the expense of the role played by the large multinational companies of the past (which is in rapid decline), could increase the importance of our association, also because it is foreseeable that within the existing associations (such as EAA) the divisions between the two compartments of the aluminium industry will increase.

This will bring advantages in terms of clarity of position within the aluminium system after years (before FACE) in which few decided for all without transparency; but it will bring even greater burdens for the SMEs not only on a purely economical scale, but also and mainly to have to acquire capacity and to act and decide independently, to be able to create new indispensable partnerships with metal producers of the new generation, to be prepared to do research, development and innovation without the reliance/support of the large companies. It will be appropriate that the downstream aluminium SMEs decide to create some groups or consortiums of companies dedicated to research, development and innovation to rationalise costs and widen the breadth of activities. In this, FACE can have, as a starting point, an important catalyst effect.

Furthermore, within the European political circles, associations are the natural and official interface between companies and governments, institutions and the media. FACE was constituted specifically to guarantee its members a clear and strong voice on the matter in defending the precise interests shared by the sector, and the results obtained are the “passport” to demonstrate the credibility achieved on the field, the validity of the choices made and the works carried out, the cohesion amongst our members. They have demonstrated to possess way ahead of time the strategic vision to organise and let function a strategic pole of independent downstream aluminium companies.

In conclusion, the independent aluminium operators in Europe need more than ever an organisation like FACE. Today, even more than in the past, FACE presents itself as an extraordinary resource, that, if it did not exist, would have to be invented.

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