G-7 Leaders Say Addressing Global Steel Oversupply Is An “Urgent” Matter
Without naming the countries that have contributed to excess capacity, at the conclusion of a two-day meeting in Japan last week, leaders of the G-7 nations (Britain, Canada, France, Germany, Italy, Japan and the United States) said global steel oversupply is a pressing issue individual nations and the G-7 must address.
In a written statement at the conclusion of the meeting, the seven countries said, “We recognize that global excess capacity in industrial sectors, especially steel, is a pressing structural challenge with global implications. This issue needs to be urgently addressed through elimination of market distorting measures and, thereby, enhancement of market function.” The leaders also said they are particularly concerned about “subsidies and other support by governments and government-supported institutions that distort the market and contribute to global excess capacity.”
An article by Agence France-Presse cited the European Union (EU) effort’s to keep China from attaining World Trade Organization market status as one possible way to keep a check on Chinese oversupply. According to the news outlet, while China wasn’t specifically cited in the communiqué, a Japanese government official said the massive steel producer came up in private discussions on the matter.” Indeed, that official said Prime Minister Shinzo Abe expects “the G7 would further communicate on the issues of excess production capacity and China's market economy status.”
Unfortunately, according to a story last week in The New York Times it appears the EU Commission might be about to ink a deal with China that would allow China to achieve market status. The commission will make specific proposals on the issue in July, but then the EU Parliament must then approve that plan. As The Times notes, parliament lawmakers “have so far rejected considering China as a market economy in trade disputes, in part because of steel.”
As a reminder, MSCI is part of Manufacturers for Trade Enforcement, a coalition of leading U.S. industry groups opposed to the automatic granting of market economy status for China at the end of 2016. The full G-7 communiqué can be found on the White House website.
In related news: the U.S. International Trade Commission announced last week that it is investigating whether Chinese steel producers stole American trade secrets, concealed the origins of steel supply, and colluded to fix prices.