OECD Secretary-General: avoid escalation and rely on international dialogue to resolve excess capacity in the global steel industry
The OECD Secretary-General Angel Gurría called on the governments of steel-producing economies to address the root causes of the steel crisis through multilateral approaches, and in particular through the Global Forum on Steel Excess Capacity. The collaborative approach of the Global Forum remains the only long-term solution to this entrenched problem and to addressing its substance rather than only its manifestations. According to Mr Gurria, “As shown repeatedly in the past, we need global solutions to global problems – and that is exactly why the Global Forum on Steel Excess capacity exists. But it must accelerate its efforts.“
Steel has been high on the G20 agenda in recent years. In September 2016, at their Summit in Hangzhou, G20 Leaders recognized that excess capacity in steel and other industries was a global issue which required collective responses. They created the Global Forum on Steel Excess Capacity, and asked the OECD to facilitate its work.
At their 2017 Summit in Hamburg, leaders confirmed their commitment to the Global Forum on Steel Excess Capacity as a critical element in resolving this perennial challenge. They agreed on policy recommendations for the restructuring of the industry, which included the elimination of the harmful subsidies that create market distortions and contribute to excess capacity. The work will continue under the Argentinean Presidency of the G20. “In view of the urgency of the situation, the GFSEC needs to take swift and tangible action in 2018,” said Mr. Gurría.
The steel industry is being confronted with serious trade and adjustment problems worldwide, perhaps the most severe in its history. Rapidly expanding production capacity during recent years has resulted in significant shifts in global trade flows and a rise in protectionist measures. Many steel companies are struggling to remain afloat.
Excess capacity is the principal cause for the current crisis. Some governments continue to provide subsidies and other support to steel production that preserves excess capacity and exacerbates imbalances of supply and demand. High barriers to exit are slowing the process of restructuring and capacity reduction. While countries are making efforts to address these different issues, they do not go far or fast enough. Implementing the necessary reforms in a coordinated and cooperative manner is the only way to ensure the sector’s long-term viability and resilience.
Working with over 100 countries, the OECD is a global policy forum that promotes policies to improve the economic and social well-being of people around the world.
Source: Organization for Economic Co-operation and Development
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