(London) Western governments are accelerating the establishment of a joint defense mechanism to counter the influx of cheap steel from China and other Asian countries, a move that could trigger a new round of trade confrontations with Beijing.
The Financial Times reported on Friday (November 21) that Western government officials, attending the OECD Steel Committee meeting in Paris this month, agreed to coordinate action to prevent their domestic steel industries from being completely destroyed by massive global overcapacity.
Cobbden, president of the Canadian National Steel Producers Association, who attended the meeting, said it was rare for multilateral organization members to coordinate economic measures to address the industries of other countries, but the continued worsening of the steel industry's overcapacity problem has already had a huge impact on global markets.
The 25 member countries of the OECD Steel Committee issued a statement after the meeting warning that this year's increase in overcapacity is the fastest since the 2009 global financial crisis, "which could seriously disrupt trade and pose risks to national and economic security."
The OECD predicts that global steel production capacity will exceed demand by as much as 38% by 2027, equivalent to 721 million tons. A large portion of this comes from China, which accounts for more than half of global production.
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According to OECD calculations, China's government subsidies for steel production are 10 times the OECD average. Meanwhile, a slowdown in China's real estate market has led to a significant drop in domestic demand. Subsidy policies in other Asian countries, including Vietnam and South Korea, have also drawn attention from Western nations.
China's Ministry of Commerce did not respond to a Financial Times request for comment. China's Ministry of Foreign Affairs responded that the controversy surrounding overcapacity is essentially a misinterpretation of market supply and demand under economic globalization and an excuse for protectionist measures.
Despite official denials of steel overcapacity in China, the country's largest steelmakers have recently responded to government calls to reduce output to alleviate fierce price competition. Luo Tiejun, vice president of the China Iron and Steel Association, said, "Due to weak demand, reducing production has become an industry consensus, although this consensus has not yet translated into coordinated action."
The United States will assume the rotating chairmanship of the OECD's Global Forum on Steel Overcapacity next year, which is expected to accelerate joint action among countries.
It is reported that U.S. Trade Representative Greer and Commerce Secretary Lutnick will meet with EU Trade Commissioner Šefčovič on Sunday (23rd) and Monday (24th) respectively to discuss steel and other issues.
