Brussels, 19/04/2016 (Agence Europe) - A high-level meeting jointly organised by the Organisation for Economic Cooperation and Development (OECD) and the Belgian Ministry of the Economy in Brussels on Monday 19 April served to confirm how great the gulf is between the countries of the OECD and China on the vexed question of the global overcapacity that is affecting the steel-making sector worldwide.
OECD steel-producing countries, led by the EU, the United States, Japan and Mexico, failed to reach agreement with China, which was invited to attend Monday's meeting, on measures to resolve the world steel sector crisis after no consensus could be reached on the causes of the global overcapacity.
At a somewhat bizarre press conference, during which Chinese Deputy Trade Minister Zhang Ji was at pains to stress that China does not subsidise its steel exporters, the representatives of the OECD countries present - Belgian Economy Minister Kris Peeters, US Deputy Trade Representative Robert Holleyman and Mexican Secretary of State for the Economy Ildefonso Guajardo Villarreal - along with European Trade Commissioner Cecilia Malmström pointed the finger of blame at China for the steel crisis, urging it to do more to reduce its production capacity.
“China does not subsidise its steel-exporting industry. Everything we do is in line with WTO rules”, stated Zhang, highlighting the “central role” played by the financial crisis in the slow-down of the global economy and steel overcapacity. Zhang also highlighted the efforts being made by China which, he said, had already reduced its capacity by 90 million tonnes and which is planning further capacity reductions of between 100 and 150 million tonnes.
It is not an academic exercise: it is about real suffering, real people, real workers, said Holleyman, after the lengthy argument by the Chinese representative, and he pointed out that Chinese production still far exceeds domestic demand.
According to the OECD, overcapacity in the steel sector worldwide was more than 700 million tonnes at the end of 2015 and could rise by a further 50 million tonnes with the construction of new factories this year. According to its critics, China will continue to have a capacity of around one billion tonnes, substantially greater than its needs.
“Unless China starts to take timely and concrete actions to reduce its excess production and capacity in industries including steel, and works with others to ensure that future government actions do not once again contribute to excess capacity, the fundamental structural problems in the industry will remain and affected governments - including the United States - will have no alternatives other than trade action to avoid harm to their domestic industries and workers”, warned US Trade Representative Michael Froman on Tuesday 19 April.
On Monday, Malmström made clear that states should not artificially keep non-viable factories open by means of subsidies but should apply the same rules to public companies as those applying to private firms.
A source in the OECD confirmed on Monday that the countries taking part in the meeting had not been able to agree on a joint press statement, largely as a result of the differences with China. “I am sure that the countries would have wanted to see concrete progress but the solution is not simple”, OECD Deputy Secretary General Mari Kiviniemi told the press. (Original version in French by Emmanuel Hagry)