A High-Level Meeting on excess capacity and structural adjustment in the steel sector was convened on 18 April 2016, at the Palais d’Egmont in Brussels, co-organised by the OECD and the Belgian government. The discussions were co-chaired by Ms. Mari Kiviniemi, Deputy Secretary-General of the OECD, and Mr. Risaburo Nezu, Chairman of the OECD Steel Committee. Belgian Deputy Prime Minister Kris Peeters and OECD Deputy Secretary-General Kiviniemi provided introductory remarks, setting the scene for the day's discussions.
The discussions brought together senior government representatives and industry representatives from all major steel producing, consuming, trading and raw material supplying economies (the Participants), to seek possible solutions to the excess capacity challenge facing the global steel industry. The primary objective of the discussions was to exchange views on the policy actions that would help reduce steel excess capacity. Another objective was to strengthen efforts to increase transparency through information sharing about measures being taken to address excess capacity and promote structural adjustment in the steel industry.
A statistical overview was provided on the state of the steel market by World Steel Association and the OECD. Demand prospects remain very weak, while global steelmaking capacity continues to increase. Excess capacity has increased significantly, posing serious problems to the steel industry. Key information from the above overview included:
Mr. Davignon (former European Commissioner for Industrial Affairs and Energy) recalled the plan that Europe had undertook in the 1970s and 1980s to reduce EU capacity, restructure, improve competitiveness and assist displaced workers. He then drew comparisons to the current period and suggested that countries could learn a great deal from restructuring experience that has occurred in the past. He underscored the temporal nature of the problem which required early intervention given the adjustment time needed to reduce capacity. Other countries intervened and drew lessons from their own restructuring experiences.
Discussion focused on the lessons learned and how best to apply them to the current situation. Some delegates felt that trade actions fail to address the underlying structural problems. The pain associated with capacity closures – financially and socially – requires a strategy that involves engagement with the public. Pure market principles are important but by themselves will not be sufficient because the active role of governments is required. As in Session 1, the importance of timing was stressed and the urgency to formulate a plan at this time.
Some industry and trade union representatives provided statements on how governments should address the crisis in the steel industry. Industry called on governments to promote swift and timely restructuring by developing long-term industrial strategies in collaboration with the steel industry, and ensuring that regulatory market-oriented approaches that ensure a process that leads to survival of the fittest producers. These trade union representatives noted the importance of ensuring that all countries play by the same trade and social rules and called on governments to provide relief to workers most affected by restructuring.
Several participants observed that a key facet of the lessons learned from this session was need to establish an objective monitoring system that builds an evidence base that focuses on the dynamics of net capacity. It was suggested by some participants that a neutral body like the OECD may usefully play this role.
High-level government representatives met in a closed session, providing further information on the challenges that they were facing in addressing the steel industry problems in their economies. They expressed appreciation for the inclusive nature of the meeting and the open exchange of information.
A number of government officials noted the importance of the steel industry to national economies and in maintaining a high value supply chain. They stressed the importance of ensuring a competitive and sustainable industry in their economies.
They overviewed the root causes contributing to excess capacity, agreeing that they include cyclical and structural factors. Significant concerns were raised about the detrimental effects of excess capacity. These effects included significant shifts in trade flows, large numbers of job losses, reduced economic viability, and harmful impacts on the environment.
Many delegates noted that excess capacity is a global challenge that needs to be reduced, and highlighted the need for pursuing effective solutions. They noted the important role of market based-based restructuring without government interventions that distort markets, and mechanisms to enhance information exchange.
A number of delegates also discussed the positive role that innovation and research and development play in the long-term viability of the industry. Some economies emphasised the long time necessary for effective restructuring and called for understanding in this context. A number of interventions highlighted the need to refrain from subsidies and other market-distorting practices, and indicated the possibility of resorting to remedial action against unfair steel trade.
A number of government delegates emphasised the need for discussions on the challenges faced by the sector to continue. As a proposal going forward several government representatives expressed interest in continuing the dialogue, including a follow-up high-level discussion in September 2016, to which all important steel-producing economies would be invited. A number of participants suggested at this meeting, the possibility of the establishment of a platform for global dialogue would be discussed, and thought this would serve as a platform for dialogue and information sharing on global capacity developments and on policies and support measures taken by governments.
Related Documents