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“The overcapacity problem is continuing to grow and it has a devastating effect on global steel markets,” Cobden, who was present at the meeting, told the Financial Times.
Global steel capacity is forecast to exceed demand by 38 per cent, or 721mn metric tonnes (mmt), by 2027, according to the OECD. A significant portion of the excess comes from China, which is responsible for more than 50 per cent of steel supply globally, after a slowdown in its property market sapped domestic demand. According to the body’s calculations, China subsidises its production at 10 times the average level of OECD countries.
In a statement issued after the meeting, the 25-member steel committee warned that excess capacity was increasing this year at the fastest pace since the 2009 global financial crisis, risking “severe trade disruptions, and leading to national and economic security risks”.
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Canada in June announced tight quotas and 50 per cent tariffs on excess steel products from countries that are not part of free trade agreements. It has previously raised concerns about subsidised steel from other Asian countries, including Vietnam and South Korea.
“It is clear that free trade in the steel industry is dead. Governments are being forced to protect their industries by China’s market distorting subsidies and colossal overproduction,” said Peter Brennan, policy director of the British lobby group UK Steel, who was also present at the OECD meeting.
Eurometal, which represents downstream steel users in Europe’s manufacturing supply chains, has claimed that three million EU industrial jobs are at risk from a “silent surge” of unfairly subsidised steel embedded in imported goods.
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Trade policy experts said the prospect of joined-up action to counter the strategic threat posed by Chinese steel overproduction could be the first move towards a “League of Democracies” defending common interests.
“If democracies team up in response to security threats — as they did to deny Russia access to their markets after the invasion of Ukraine — there’s nothing to stop them doing the same for economic threats,” said Simon Evenett, professor of geopolitics and strategy at IMD business school in Lausanne, Switzerland.
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I guess they're sad neoliberalism failed to make their promised utopia.