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China economy

US slams global steel forum for lack of results on curbing rising output in China

US complains that global steel forum has not helped to reduce global output, at a time when Chinese output continues to set records

PUBLISHED : Friday, 21 September, 2018, 2:07pm
UPDATED : Friday, 21 September, 2018, 3:18pm

This story is published in a content partnership with POLITICO. It was originally reported by Doug Palmer on politico.com on September 20, 2018

The Trump administration on Thursday issued a blistering statement questioning the value of a global forum created by G20 leaders in 2016 to work on reducing excess production capacity in steel.

“The United States has been an active and committed partner in this process, working to seek prompt implementation of the forum’s past policy recommendations, which are aimed at reducing excess capacity as well as restoring balance and market function in the global steel sector,” the Office of the US Trade Representative said in a statement after ministerial level talks wrapped up in Paris. “Unfortunately, what we have seen to date leaves us questioning whether the forum is capable of delivering on these objectives.”

The US statement did not mention China by name but seemed to refer to the world’s second largest economy, which the Trump administration accuses of creating huge excess capacity in steel through massive government subsidy programmes.

“We do not see an equal commitment to the process from all forum members,” USTR said.

The forum was created to get China to curb its steel output, which was flooding world markets at the time. But Chinese output has continued to grow since the forum was created.

In March, US slapped 25 per cent tariffs on all steel imports in an attempt protect the domestic US industry.

China produced a record 81.2 million tonnes of raw steel in July this year, up 7.7 per cent from a year earlier, according to the World Steel Association. China’s steel output exceeded the combined production of the rest of the other 63 nations in the association for the sixth month in a row.

“Commitments to provide timely information critical to the proper functioning of the forum’s work, for example, have gone unfulfilled. More importantly, we have yet to see any concrete progress toward true market-based reform in the economies that have contributed most to the crisis of excess capacity in the steel sector.”

USTR also said a “consensus report” released by the 33 countries attending the meeting showed “the struggles and limitations of the forum process to date.”

That report is not yet publicly available but is expected to be posted on the G20 website sometime next week.

“Like in years past, the report underscores the urgency of the problem of excess capacity and makes recommendations about how to address it,” USTR said. “But the report will do nothing to solve the fundamental causes of the problem. This will happen only when those that have created this problem act to remove subsidies and other measures that distort markets and create serious global imbalances, and take action to eliminate excess capacity.”

The USTR statement contrasted sharply with remarks made by Argentine Commerce Secretary Miguel Braun at a press conference after the meeting. He called the new report a “solid first step” that showed “the global forum is a valuable tool.” Argentina chaired the meeting because it is the current G20 president.

Deputy US Trade Representative Jeffrey Gerrish led the US delegation to the meeting. Despite its disappointment with the outcome, USTR thanked Argentina “for its efforts to achieve meaningful outcomes from the Forum process this year.”