The Administration plans to release new policy ideas on how to respond to non-market economy policies and practices, Assistant US Trade Representative Sushan Demirjian told members of the Global Forum on Steel Excess Capacity yesterday.
“USTR is considering how non-market policies and practices, including non-market excess capacity, threaten the integrity of our supply chains,” she told the gathering.
“These issues are critically interlinked. Non-market policies and practices harm our workers and businesses by creating concentration of production, dependence, and chokepoints.”
Current global trade rules are inadequate to address the types of behavior and policies that have led to global excess capacity in the steel industry, she said.
“That is why addressing global steel excess capacity should be a priority for all governments – for the future of our steel and other critical industrial sectors and also the functioning of and confidence in the multilateral trading system.”
The forum was created in response to the excess capacity of steel coming from China. On the same day the forum met, Commerce Secretary Gina Raimondo raised the overcapacity issue in a telephone call with Chinese Minister of Commerce Wang Wentao.
Ms. Raimondo emphasized “ongoing concerns from the US business community about decreasing regulatory transparency in the PRC, non-market policies and practices and structural overcapacity in a range of industrial sectors,” according to a readout from her office.
She also reiterated that US national security is not negotiable and re-emphasized that the US government’s “small yard, high fence” approach aims to safeguard US national security in as targeted a manner as possible, while leaving space for healthy trade and investment.
Following is the Global Forum on Steel Excess Capacity Ministerial statement:
Meeting in a virtual format on 8 October 2024, Ministers and high-level representatives of members of the Global Forum on Steel Excess Capacity (GFSEC) – Australia, Austria, Belgium, Brazil, Canada, European Union, Finland, France, Germany, Greece, Hungary, Italy, Japan, Korea, Luxembourg, Mexico, Netherlands, Norway, Poland, Slovak Republic, Spain, Sweden, Switzerland, Türkiye, United Kingdom and the United States [Malaysia, the Philippines, Thailand and Ukraine joined the meeting as observers] – discussed the significant challenges arising from the ongoing and considerable increase in steel excess capacity and its serious impact on GFSEC economies through rising steel imports and market distortions. They acknowledged the need to take appropriate actions to counter these challenges and called on other countries to join in cooperation with the GFSEC, particularly steel-producing nations sharing their concerns.
During the meeting, representatives:
Recognised the critical and strategic role of the steel industry in their economies, accounting for 6 million jobs worldwide, 0.7% of global GDP, and 2.4 % of global trade. Steel is the backbone of the manufacturing and construction sectors, and is needed for high-value activity across a range of other critical sectors, including infrastructure, mining, energy and transportation. Many steel installations, regardless of size, provide important employment and economic development for the local communities where they operate.
Recalled their statement from 8 June 2023 in which they expressed grave concerns about global steel excess capacity and concluded that this trend has since deteriorated with a detrimental impact on their respective steel industries. Global steel excess capacity increased to 551 million metric tonnes (MMT) in 2023, exceeding the steel production of all GFSEC members combined, which stood at
478 MMT. Excess capacity remains a significant and growing structural problem, with surging exports of steel from countries that are sources of excess capacity. Notably, these exports are increasingly circumventing legitimate trade defence measures, causing further injury to domestic industries and undermining government efforts to address unfair competition. The troubling upward trajectory of global excess capacity will persist; with numerous capacity additions in progress, excess capacity is now set to rise to 630 MMT by 2026.
Acknowledged that global excess capacity is being fuelled particularly by the non-market policies and practices of certain countries, including investment by their state-owned enterprises. This includes government support measures that distort markets and diminish competition in a manner that is inconsistent with market-based conditions. Excess steel-making capacity and resulting global trade distortions tilt the playing field towards inefficient producers, which disadvantages market-based, efficient and sustainable production.
Welcomed the OECD Facilitator’s robust empirical evidence of the impacts of global excess capacity on GFSEC members. This comprehensive body of work shows that non-market policies and practices drive excess capacity, reducing capacity utilisation rates and profitability margins in GFSEC member steel industries. Affirmed that steel excess capacity has a severe negative impact on jobs, production, prices, market share, revenue, and profitability in the industry. Concluded that global excess capacity disrupts global markets, displaces efficient and more sustainable steel production, and seriously harms the viability of the steel industries of GFSEC members and other steel-producing countries.
Noted that iron and steel sector carbon emissions contribute up to 8% of global CO2 emissions. The growth in global excess capacity has a negative impact on global carbon emissions and seriously reduces the financial capability of steel companies to invest in new and existing technologies needed in order to significantly reduce carbon emissions.
Recognized the importance to take concrete actions to address global steel excess capacity and reaffirmed the commitment to the Berlin principles and policy recommendations adopted by all founding members of the GFSEC on 30 November 2017, as set out in the Annex to this statement. These principles call for fostering a level playing field in the steel industry, refraining from market-distorting subsidies and government support measures, ensuring market-based outcomes in the steel industry, and increasing transparency as concrete policy solutions to reduce excess capacity.
Looked forward to improving the transparency of dynamic market information as part of the work on excess capacity. This would enable GFSEC members to better address the distortions caused by excess capacity, including with respect to the circumvention of trade measures.
Tasked the Facilitator to develop new detailed analysis and timely monitoring and visualisation tools for greater transparency and visibility by June 2025. This would provide additional information to members to help assess and address global excess capacity and its impacts.
Asked the Forum to consider approaches that effectively address the root causes and consequences of excess capacity, taking into account that the situation is worsening and, so far, existing international approaches have had limited impact in this regard.
Asked the Forum to report back by the end of 2025.
Acknowledged that the excess capacity challenges facing the steel industry need to be addressed by collective, multi-pronged and sustained efforts by members and non-members.
Welcomed all steel-producing and steel-consuming economies, which share such concerns, to cooperate with the GFSEC to jointly develop effective responses.
Looked forward to encouraging new members to join the GFSEC and adhere to the Berlin principles and policy recommendations.
Tasked the GFSEC to report on the status of these actions before October 2025, reviewing developments and consulting at the Ministerial level again to consider what further actions may be needed.
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