10 Steel Industry Associations Welcome Global Communique on Steel Overcapacity, Call on China to Join

May 5, 2016

BRUSSELS – On April 18, 2016, high-level representatives from governments around the world, along with representatives from the global steel industry, met in Brussels to address the severe overcapacity crisis afflicting the steel industry. The “High Level Meeting on Excess Capacity and Structural Adjustment in the Steel Sector” was organized by the OECD and hosted by the Kingdom of Belgium. As a result of that meeting, the governments of Canada, the European Union, Japan, Mexico, the Republic of Korea, Switzerland, Turkey and the United States issued a significant statement noting two relevant issues. First, the “challenges facing the steel industry, have an important global dimension that needs to be address through ongoing international dialogue”; and, second, that “while the challenges facing the industry arise from many factors, such as structural and cyclical economic developments, government support measures have contributed to significant excess capacity, unfair trade, and distortions in steel trade flows.”

The governments concurred on a number of steps that could be taken to address the challenges facing the global steel industry, including to:

  • Ensure that governments and government-supported institutions do not provide subsidies or other support that: 1) sustain uneconomic or consistently loss-making steel plants, 2) encourage investment in additional steelmaking capacity which would otherwise not be built; or, 3) otherwise distort competition, 
  • Ensure that government plans, policies, directives and guidelines, whether issued or implemented by government entities or government-supported institutions, do not encourage the net expansion of steelmaking capacity and that all uneconomic or consistently loss-making steel enterprises are permitted to exit the market and close facilities. 
  • Work together to identify and promote policies that address the detrimental impact of steel facility closures on workers and affected communities, while facilitating the closure of uneconomic or consistently loss-making facilities. 
  • Enhance the exchange of information on: 1) capacity developments; and, 2) the formulation and implementation of the support measures and industrial policies being taken in steel. 
  • Ensure that those enterprises in which their governments have full or partial ownership do not receive special benefits that distort competition. 

Steel producers from around the world welcomed this statement as an important step toward addressing the global steel excess capacity crisis. However, many in the industry also expressed concern that China – the nation which accounts for approximately half of the world’s steel capacity – did not join in the statement.

Ten steel industry associations, representing the U.S, Canada, Mexico, Latin America, Brazil, Europe, and Turkey today said, “While we were disappointed that the Chinese government was unwilling at this time to join with other governments in a program of actions to address the global steel overcapacity problem, we are encouraged by the support of governments of eight major steelmaking countries and regions to recommend steps to address excess capacity in the steel sector and eliminate market-distorting government subsidies and other support that promotes and sustains excess capacity in the steel sector, distorting competition. We did not expect to solve the crisis in one meeting; however, we did hope that the governments of all major steel producing nations would be able to make commitments on a set of principles and agree to work together to help address the crisis. Despite consensus among many countries who participated, China’s lack of support prevented a broad agreement on these commitments.” 

The steel associations recognized that the Brussels meetings were one step in the right direction, and urged the Chinese government to “constructively participate in future discussions at the OECD and elsewhere to address the global steel overcapacity crisis.”

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Contacts:
AISI – Lisa Harrison, lharrison@steel.org, 202.452.7115
SMA – Phil Bell, bell@steelnet.org, 202.296.1515
CSPA – Joe Galimberti, j.galimberti@canadiansteel.ca , 613.238.6049
SSINA - Skip Hartquist, dhartquist@kelleydrye.com, 202.342.8450
CPTI - Tamara Browne, tbrowne@schagrinassociates.com, 202.223.1700
Canacero - Salvador Quesada, squesada@canacero.mx, 52 (55) 5448-8162
Alacero – Rafael Rubio, rrubio@alacero.org, (56-2) 2233-0545
Eurofer- Charles de Lusignan, charles@eurofer.be, 0032 2 738 79 35
Brazilian Steel Institute – Marco Polo de Mello Lopes, marcopolo@acobrasil.org.br, 5521 34456310
Turkish Steel Producers Association – Veysel Yayan, veyselyayan@celik.org.tr, 903124663734

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