U.S. trade officials were critical of a report issued this week on ways to reduce excess capacity in the global steel market. More than 30 steel producing countries representing 90 percent of global steel manufacturing launched the Global Forum on Excess Steel Capacity in December 2016 in an effort to address the systemic issues causing the global steel crisis. The European Union said forum members have now agreed on “an ambitious package of concrete policy solutions,” but the Office of the U.S. Trade Representative said “much work remains.”
The forum’s report calls on member countries to remove and refrain from adopting market-distorting subsidies and other support measures provided by governments and government-related entities that contribute to excess capacity or encourage companies to undertake capacity expansion projects or maintain consistently loss-making or uneconomic steel plants. The report also makes a number of other recommendations on creating a level playing field, industry restructuring, capacity reduction targets, mergers and acquisitions, export credits, and transparency.
The EU characterized these measures as an “agreed package” and said there is a “robust monitoring mechanism” to track implementation in 2018 and 2019. However, USTR suggested that the forum had succeeded only in “pointing to short-term developments and worn out promises.” USTR acknowledged the report’s “many helpful policy prescriptions” but said “meaningful progress” in addressing the root causes of steel excess capacity will only come through “immediate and sustained concrete action by all steelmakers, including allowing markets to function, removing market-distorting subsidies and other forms of state support, and treating state-owned enterprises and private steelmakers equally.” Until that happens, USTR said, the U.S. “will not hesitate” to use other tools to “firmly respond to the causes and consequences of steel excess capacity.”
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