going spare: steel, excess capacity, and protectionism

Going Spare: Steel, Excess Capacity, and ProtectionismThe 22nd Global Trade Alert Report

by Simon J. Evenett and Johannes Fritz

CEPR PRESS

CEPR Press

Centre for Economic Policy Research33 Great Sutton StreetLondon EC1V 0DX

Tel: +44 (0) 20 7183 8801Fax: +44 (0)20 7183 8820Email: [email protected]: www.cepr.org

Going Spare: Steel, Excess Capacity, and Protectionism

© CEPR Press, 2018

TABLE OF CONTENTS

Recent statements on the Global Forum on Steel Excess Capacity 4

CHAPTER 1Executive Summary 6

CHAPTER 2Steel and excess capacity take their place on the G20 Agenda 9

CHAPTER 3What has the G20 Forum on Steel Excess Capacity done? 15

CHAPTER 4Has the G20 broadened its policy monitoring in the steel sector? 20

CHAPTER 5How incomplete is the Global Forum’s monitoring of members’ policy choice? 23

CHAPTER 6What percentage of steel trade faces trade distortions? Of what kind? 31

CHAPTER 7Are Chinese steelmakers different? Evidence from corporate accounts 37

CHAPTER 8What is excess capacity? Can it be accurately measured? 43

CHAPTER 9When is excess capacity a systemic trade concern? 46

CHAPTER 10Is Chinese excess capacity a systemic trade concern? 49

CHAPTER 11Recommendations for the Global Forum on Steel Excess Capacity and for the G20 trade work programme 61

CHAPTER 12What’s new in the Global Trade Alert database? 62

What is the Global Trade Alert? 63

Acknowledgements 63

ANNEX FOR EACH GLOBAL FORUM MEMBER

Argentina 65

Australia 67

Brazil 69

Canada 71

China 73

European Union 75

India 77

Indonesia 79

Japan 81

Mexico 83

Norway 85

Russia 87

Saudi Arabia 89

South Africa 91

South Korea 93

Switzerland 95

Turkey 97

United States 99

Going Spare: Steel, Excess Capacity, and Protectionism | 4

OFFICIAL STATEMENTS ABOUT THE GLOBAL FORUM ON STEEL EXCESS CAPACITY

“The Forum has not made meaningful progress yet on the root causes of steel excess capacity, and pointing to short-term developments and worn out promises will not cure the fundamental causes of the problem. Addressing the ongoing steel excess capacity situation will require immediate and sustained concrete action by all steelmakers, including allowing markets to function, removing market-distorting subsidies and other forms of state support, and treating state-owned enterprises and private steelmakers equally. This view is shared by nearly all Forum members, and we welcome this recognition.

The Report issued today contains many helpful policy prescriptions, but it fails to highlight the recurring failure of some countries to implement true market-based reforms in the steel sector. In addition, the Report does not contain complete information regarding market-distorting measures in certain economies and does not set forth a clear pathway for filling such data gaps. The Report erroneously suggests that simply setting capacity reduction targets has been an effective response to the crisis, when in fact meaningful progress can only be achieved by removing subsidies and other forms of state support and letting markets do their work” Excerpt from the United States Trade Representative’s statement upon the publication of the November 2017 report of the Global Forum

“The problem of excess capacity of steel has real effects on people’s lives – especially those who become unemployed. Today, we have agreed on an important and effective package to tackle the pressing issue of global steel overcapacity. These wide-ranging policy solutions will help create a level playing field and support EU growth and jobs. This is a global challenge, and it has to be dealt with accordingly…Of course, our work is not yet done. Now we need to walk the talk.” Statement by Mrs. Cecilia Malmström upon publication of the Global Forum’s Report

“China pointed out at the meeting that the steel excess capacity was a common, cyclical and structural problem emerging in the process of global economic development rather than a unique economic phenomenon in the steel industry. It is a common difficulty and challenge faced by every country in the world rather than only by China. It happens for various reasons, and the world economic recession caused by the American Financial Crisis in 2008 is the fundamental cause of this steel excess capacity which turns out to be a global issue and leads to the decrease of steel demand. This is also a consensus reached by the leaders at the G20 Hangzhou summit.

China stressed that in recent years, the Chinese government has taken the initiative to promote the supply-side structural reform, and through marketization and legalization measures, it has actively eased the excess capacity problem with clear goals, powerful measures and remarkable achievements. Over 100 million tons of backward steel capacity has been obsoleted since 2016. According to the information shared by the forum members, in 2014-2016, China’s eliminated steel capacity accounted for over 120% of the world’s total. For that outcome, China has paid huge prices and has overcome numerous difficulties. In 2016 alone, the steel industry re-arranged jobs for 201,000 staff, exceeding the steel industry’s total employment in the US and Japan respectively, equivalent to 60% of that in Europe. China’s initiative in resolving steel excess capacity is a self-conscious, proactive, firm and continuous move as well as the need of self-development. This move has made significant contribution to the development of the world steel industry.”Excerpt from the statement from China’s Ministry of Foreign Commerce after the Global Forum meeting in November 2017

“So far, all it’s done is talk a lot.” Wilbur Ross, US Commerce Secretary, on the Global Forum


PRIVATE SECTOR AND TRADE UNION STATEMENTS ABOUT THE ACCOMPLISHMENTS OF THE GLOBAL FORUM ON STEEL EXCESS CAPACITY

“This situation cannot continue. It is not sustainable. The Global Forum must reach a concrete arrangement that will tackle the plague of global overcapacity…This framework provides a hook to structure and channel the real implementation work ahead of us, with the ultimate goal of enforceable rules that provide a real global level playing field for European steelmakers.” Axel Eggert, Director General of the European Steel Association (EUROFER)

“While it is good to see the cooperation between countries and to continue diplomatic efforts to deal with this issue, until the forum identifies specific measures, timetables and targets the overcapacity problem will persist. This is a first step in a process that I hope becomes more robust over time. As we wait to see further progress, U.S. steel producers must continue to insist on vigorous enforcement of U.S. trade laws, and a timely conclusion of the Section 232 investigation that includes positive remedy proposals.” Philip K. Bell, President, US Steel Manufacturers Association

“Two years of dialogue and meetings resulted in a 52-page report and a set of principles that acknowledges there is global steel overcapacity which is continuing to grow. For the participants in the Global Forum, this may be viewed as a victory, but for workers in the steel sector in the United States, it is just another sign that political leaders are fiddling while Rome burns.” Statement, United States Steelworkers Union

“In light of the conclusions reached last July at the G20 Summit in Hamburg, Germany, and the publication of the Global Forum on Steel Excess Capacity Report, we are writing to urge G20 leaders to apply this framework to a similar global forum on aluminium excess capacity. We believe the Global Forum on Steel Excess Capacity is a useful model for tackling these persistent issues with a coordinated effort also for aluminium” Letter to several G20 Sherpas from Heidi Brock, President and CEO of The Aluminum Association, Milton Rego, Executive President of the Aluminium Association of Brazil, Jean Simard, President and CEO, of The Aluminium Association of Canada, Gerd Götz, Director-General of European Aluminium, Fernando A. Garcia, President, Instituto Mexicano del Aluminio, A.C.and Yoshihisa Tabata, Executive Director of Japan Aluminium Association


CHAPTER 1 EXECUTIVE SUMMARY

During the past year some of America’s trading partners have sought to rein in Washington’s unilateral protectionist instincts by framing the woes of the trading system in terms of global excess capacity—essentially diplomatic code for Chinese excess capacity in manufactures. The joint EU, Japanese, and US statement pledging cooperation on such matters at last December’s WTO Ministerial Conference was an important milestone in this strategy. In light of the threatened imposition of tariffs on steel and aluminium products on widely-derided national security grounds, this report examines whether America’s trading partners should double down on this particular co-option strategy. To do so, we evaluate whether excess capacity in manufactured goods is a systemic threat to the world trading system.

We conclude there is no compelling case for governments going spare over global excess capacity in manufacturing. From the perspective of the global trading system, a nation’s excess production capacity is not the issue per se but the harm such excess capacity does to trading partners is. We build our case first by critically evaluating the implementation of the only G20 initiative to tackle sectoral excess capacity, namely in the steel sector. The dissatisfaction of key steel sector stakeholders with this initiative’s execution is merited. That the steel sector is plagued by trade distortions is not in question, how the G20 has gone about tackling it is.

Then we muster empirical evidence that sheds light on how little global trade is in sectors where China has excess capacity. Moreover, exports from these sectors account for only a small share of China’s total exports. Critically we show how systemically unimportant are the trade-related knock-on effects of excess capacity such as import surges and how infrequently G20 governments have bothered to respond to import surges in excess capacity sectors during the past 10 years.

On examination, it turns out that the phrase excess capacity is slippery—rhetorically useful, but hard to pin down, even harder to operationalise, and at the same time woefully misleading. So excess capacity joins the list of superficially appealing trade policy jargon such as unfair trade and managed trade. A focus on excess capacity in some manufacturing sectors ignores the trade policy challenges building up in other sectors of the world

economy. Framing future trade cooperation in terms of global excess capacity isn’t the way forward. The focus should be on the altering policies that distort commerce not targeting market outcomes, of which excess capacity is one.

The G20’s record on steel excess capacity: one step forward, several steps backIn assessing the impact of the Global Forum on Steel Excess Capacity it is worth noting that world steel prices had risen 50% from their nadir before the Forum’s terms of reference were even agreed in December 2016 (Figure 2.2). Still, compared to the G20’s initiative on protectionism, this Global Forum represents one step forward and several steps back.

The advance came in recognising that a wide range of government policies distort steel trade, going well beyond the narrow range of policies mentioned in the original G20 pledge on protectionism. Problems arose, however, when G20 members balked at the implications of this for monitoring policy choice and for designing a steel excess capacity reduction plan with teeth.

One failing of the G20 steel forum is that it relied on member governments to report on their own policy intervention. Consequently, G20 governments grossly under-reported their own resort to antidumping actions, anti-subsidy tariffs, subsidies and export incentives granted, and other import tariff increases in the steel sector (Table 5.3). In addition to being woefully incomplete, the November 2017 Global Forum report failed to provide any national and global statistics on policy choice.

In contrast, our report includes member-by-member data on policies used in the steel sector (in chapter 5) as well as data (in the annex) on the contribution of each member to global steel overcapacity as the share of their steel imports and exports that face trade distortions. Some surprising findings arise. For example, even before the recent steel tariffs were imposed by the US, the cumulative effect of the 144 American actions to limit steel imports still in effect today covered 96.8% of US steel imports (see page


100). We also show that resort to trade distortions in the steel sector surged in 2014-6, even after stripping out trade remedy cases (Figure 6.2).

By 2017 such was the build up of trade distortions in the steel sector that only 30% of steel exports from Global Forum members competed on a level playing field (Figure 6.3). Many steel exporters face multiple trade distortions when competing in foreign markets—on that the critics are right. Nearly 60% of Global Forum steel exports compete in foreign markets against rivals benefiting from state-provided export incentives. Even if the latter are excluded, the cumulative effect of remaining trade distortions—including bailouts for steel firms and local sourcing rules for steel—still covers half of steel exports in 2017 (Figure 6.3). Given the Global Forum failure to document let alone roll back this dog’s breakfast of trade distortions, perhaps it is unsurprising that some governments have taken a unilateral path. More constructively, we make six recommendations to improve the working of the Global Forum in Chapter 11.

New evidence on Chinese steel subsidiesWe used corporate financial statements to shed light on differences in performance of publicly listed Chinese and non-Chinese steel makers and their potential receipt of state largesse. Median profit margins differ little between steelmakers in China and abroad and there is no clear pattern that higher world steel prices favoured Chinese firms over rivals. In 2017 that was the case, but the opposite was true during comparable steel prices in 2010 and 2011 (Figure 7.1). Moreover, as far as profit margins are concerned, it is hard to see how publicly listed Chinese steelmakers were punished by the foreign government measures of recent years. Chinese steel capacity reduction is likely the driver of higher profit margins.

More telling is the sizeable narrowing of the gap between the gross and operating margins of Chinese firms and their foreign rivals and no narrowing in differences between their operating margins and pre-tax profit margins (Figure 7.2). The former finding implies that Chinese steelmakers probably benefited from a more generous depreciation and allowances regime than foreign rivals. The latter finding suggests that differential access to cheap credit was not a driver of profit margin performance, contrary to much conventional wisdom.

Analysis of the financial reports of publicly listed firms also showed that from 2008 on government subsidies to Chinese steelmakers rose sharply, reaching nearly one billion US dollars in 2015 (Figure 7.3). These subsidies never exceeded 1% of the firms’ revenues but, given

profit margins are so thin in this sector, this largesse likely prevented loss making by some Chinese steelmakers (Figure 7.4). Subsidies and tax breaks reported in recent years by listed non-Chinese steelmakers are skewed towards Tata Steel and the Steel Authority of India (Figure 7.5).

Targeting steel excess capacity is a fool’s errandAccurate measurement of steel capacity is a real challenge. Remarkably, the Global Forum’s and the OECD’s latest estimates of Chinese steel production capacity differ by over 91 million metric tonnes. Worse, headline numbers on global steel overcapacity reported by the Global Forum are misleading. These headline numbers do not take account for the fact that in ordinary times steel firms run at less than full capacity. With a target utilisation rate of 80% (the arbitrary level chosen independently by the US and Chinese governments), the headline global steel overcapacity estimate falls from 737 million metric tonnes to 262.4 million metric tonnes, a 64% reduction. All in all, there are serious difficulties in operationalising excess capacity for policymaking purposes (Chapter 8).

If there is any merit in focusing on excess capacity it is because of the cross-border harm that it does to trading partners. With that in mind, we summarise our findings about the global significance of trade in sectors where there is Chinese excess capacity.

86% of Chinese exports to the G20 are not in excess capacity sectorsUsing both a narrow and a broad definition of the sectors where China is thought to have excess capacity, we found that from 2005 on no more than 21% of world trade was in these sectors. That percentage has been falling since 2011 to 18% in 2016, just as G20 policymaker interest in this matter has been rising! Moreover, the percentage of total Chinese exports shipped worldwide in sectors where China has excess capacity peaked at 18% in 2008 and has declined since to 15.8% in 2016, the last year for which a full set of international trade data is available (Figure 10.1). When Chinese exports to the rest of the G20 are considered the 2016 percentage falls from 15.8% to 14%, suggesting that six-sevenths of Chinese exports are in sectors where excess capacity is not a problem.

We confirm that excess capacity sectors witness more discriminatory policy intervention than their share of world trade might suggests, a finding that goes beyond the high-profile duties imposed on dumped and subsidised goods (Figure 10.3).


We also found that each year less than 2% of the total G20 manufacturing imports were affected by import surges in sectors where China has excess capacity—and this statistic includes import surges originating in those sources outside of China. Meanwhile, the corresponding percentage for sectors where China does not have excess capacity has risen since 2011 to nearly 4% (Figure 10.5). As far as import surges are concerned, sectors with Chinese excess capacity generate less disruption to G20 manufacturing trade than sectors without.

Furthermore, China’s share of G20 imports affected by import surges is smaller in sectors where China does has excess capacity, a finding that stands even if the foreign markets where China is blocked by trade remedy actions are taken into account (Figure 10.7) Governments worried about the adverse consequences of import surges should not focus exclusively on sectors where China has excess capacity sectors.

G20 governments rarely take action against import surges in excess capacity sectorsOur last, and perhaps most surprising, piece of evidence relates to the frequency with which G20 governments respond to import surges by raising import barriers or granting subsidies to domestic firms. For import surges lasting one year, G20 governments react by raising import barriers 3.6% of the time in sectors where there is no Chinese excess capacity. In contrast, in sectors with Chinese excess capacity import barriers are raised 5.0% of the time. That means that only in one case in twenty have G20 governments reacted to year-long import surges in Chinese excess capacity sectors by raising trade barriers (Table 10.2). Granting subsidies in response to import surges occurs even less often. For two year-long import surges only one in ten import surges in sectors with Chinese excess capacity induces an import-restricting policy response by G20 governments.

That over the past decade G20 governments reacted so rarely to import surges in excess capacity sectors undercuts their trade policymakers’ contention that excess capacity is a systemic concern.


CHAPTER 2 STEEL AND EXCESS CAPACITY TAKE THEIR PLACE ON THE G20 AGENDA

1 It being understood that the trade frictions in the steel sector in recent years have plenty of precedents and helps account in part for why the Organisation for Economic Co-operation and Development (OECD) has a committee devoted to steel sector matters.

To many, steel production is the quintessential industrial sector, not least because steel is a vital input to many other firms. To others, steel is a crucial material for tanks, warships and the like and is associated with military strength. To trade policy analysts, however, steel conjures up a different form of strength, that of effective lobbying to muscle policymakers into protecting national firms against imports. Steel handily beats the runner up—the chemicals sector—in its ability to encourage governments to deliver temporary relief against import competition through antidumping duties. As Figure 2.1 shows, just under half of antidumping investigations initiated in

recent years relate to the steel sector. Since world trade fell in the aftermath of the global financial crisis, the steel sector has been responsible for a growing share of dumping investigations, frequently accusing foreign firms of engaging in unfair trade practices.

But that is not all. The steel sector scored another first in recent years. It became the first manufacturing sector to gets its commercial woes on to the G20 trade policy agenda.1 Following a 50% fall in world steel prices from 2011 to 2015 (see Figure 2.2), the steel sector successfully agitated to get trade ministers and then G20 Leaders to take their concerns seriously from 2015 on.

FIGURE 2.1No manufacturing sector is as effective at securing import protection than the steel sector

Data source: World Trade Organization, sectoral data for “base metals and articles.”

https://twitter.com/intent/tweet?text=pic.twitter.com/obS5FfvMnX

https://www.globaltradealert.org/reports/download_tables/44



This is witnessed by the statements made by these senior trade officials at home and at ministerial meetings and the like in 2016 and 2017. In these statements, direct links have been made between trade frictions and the development of steel excess capacity worldwide and, in particular, in China. Then United States Trade Representative, Mr. Michael Froman, told a US Congressional hearing on 12 April 2016 “While we express our willingness to work closely with China on this issue as cooperatively as possible, we’ll also remain clear that they cannot shift their excess capacity onto global markets without serious trade responses.”2 Froman noted, however, that the US had deployed “every bilateral mechanism to press China for progress” but had not been successful. Consequently, the United States and other nations complemented unilateral action by diplomacy in leading international fora such as the Organisation for Economic Co-operation and Development (OECD) steel committee and, ultimately, the G20.

Steel industry representatives have been urging collective responses as well. For example, at the same hearing that Mr Froman spoke, Mr. Laurence Traub, a representative of the American Institute for International Steel, recommended that the US administration use the G20

2 Inside US Trade. “Froman warms of ‘serious trade responses’ to Chinese overcapacity.” 15 April 2016.

3 Ibid.

4 Buiness20. “The Global Forum Must Deliver Results! Ministerial Meeting of the Global Forum on Steel Excess Capacity on November 30, 2017”. Press release. November 2017.

5 An example of pinning the blame on Chinese excess steel capacity can be found in the following statement by the President of the European Commission in September 2016: “As far as the overcapacity of the steel sector is concerned, we consider that this is a global problem but there is a specific Chinese dimension we have to address and we did address in the last months.” See Bloomberg, “Global Steel Glut Concerns Raised in G-20 Draft Statement,” 3 September 2016.

to seek a voluntary restraint agreement on production capacity backed up by the threat of unilateral import restrictions.3

Excess capacity as a trade policy problemThe B20, the business association that advises the G20 Leaders, went further and developed what might be termed a theory of harm—a possible explanation for the causes of excess capacity and its links to international trade and trade frictions. In November 2017 the B20 argued:

“Overcapacity is the consequence of overinvestment led by government intervention and support measures. This situation caused a significant decline in steel prices and trade friction and thus highlights the importance of an agreement on the elimination of such measures.”4

Data purporting to show a surge in Chinese steel excess capacity (which had been rising steadily since 2011) and a surge in Chinese exports in 2014 and 2015 appeared to reinforce the impression that Chinese excess capacity was the problem5 that had manifested itself as an export surge

FIGURE 2.2World steel prices bottomed out in late 2015 and have doubled since

Source: Bloomberg.

https://twitter.com/intent/tweet?text=pic.twitter.com/FjR9o4IfxH




(see Figure 3). Indeed, the association became so strong that the “problem” of excess capacity was frequently linked to trade frictions often without mention of surging exports or imports.

As job losses in the steel sector mounted in Western Europe and in the United States during 2015 to 2017, garnering all manner of headlines, the steel sector was able to get their concerns on to the agenda of G20 trade officials and then elevated to the G20 Leaders themselves (see statements contained in Box 1). Indeed, at the Hangzhou summit of G20 Leaders in 2016 it was agreed that a Global Forum on Steel Excess Capacity would be established to devise initiatives that reduce excess capacity in the steel sector.

The G20 trade policy agenda broadensAs the travails of the steel sector moved up the G20 agenda, two other developments are worth noting. First, in contrast to their pledge to eschew protectionism, which focused on a limited range of (principally) traditional trade distortions, in their work on the steel sector there was recognition that a wide range of government policies could distort commercial decision-making. Information

6 There is no suggestion here that the G20 is the only international fora where such pressure on China is being applied.

on public policy interventions sought by the secretariat supporting the Global Forum on Steel Excess Capacity was broader in scope than that reported by the official monitors of the original G20 protectionism pledge.

Second, the difficulties faced by the steel sector and the apparent role of excess capacity in generating them was used by a growing number of officials from G20 governments to make a more general point. Namely, that excess capacity in many industrial sectors is a systemic problem for the world trading system that should be tackled, constituting a further broadening of the G20 trade policy agenda.

Once again, China was often accused directly or indirectly of being responsible for such excess capacity (see, for example, the joint statement by senior trade representatives of the European Union, Japan, and the United States in Box 2). Indeed, at times the matter of excess capacity appears to be promoted aggressively as a means to encourage the Chinese government to reform or to stop or limit certain types of policy interventions.6

FIGURE 2.3Chinese steel excess capacity rose steadily from 2011 but its steel exports

jumped in 2014 and 2015 and then fell back sharply in 2017

Source: World Steel Association (WSA), United States International Trade Administration.

https://twitter.com/intent/tweet?text=pic.twitter.com/5GZ4ls78Y3




Questions raised by the broadening of this G20’s trade policy agendaThat the agenda of a global initiative evolves is not unusual but it does beg questions that may reveal the potency of what, in this case, is supposed to be the leading approach to devising international collective action on pressing challenges facing the global economy. A greater focus by the G20 on excess capacity begs the following questions: what causes excess capacity? For example, in the panels in Figure 2.4 below, sizeable shifts in demand for steel coincide with the observed changes in excess capacity, questioning how strong the link is between public policy intervention and the level of excess capacity.

How much spare capacity is excessive? How precisely does excess capacity harm trading partners? What, then, is the theory of harm? What evidence is there to support that theory? What evidence is there that excess capacity sectors are different from other sectors, perhaps in terms of observed policy intervention in those sectors and their propensity to generate adverse knock-on effects for

Box 2.1: G20 Ministerial and Leaders Declarations on steel and excess capacity

G20 Trade Ministers meeting July 2016“We recognize that the structural problems, including excess capacity in some industries, exacerbated by a weak global economic recovery and depressed market demand, have caused a negative impact on trade and workers. We recognize that excess capacity in steel and other industries is a global issue which requires collective responses. We also recognize that subsidies and other types of support from governments or government-sponsored institutions can cause market distortions and contribute to global excess capacity and therefore require attention. We commit to enhance communication and cooperation, and take effective steps to address the challenges so as to enhance market function and encourage adjustment. The G20 steelmaking economies will participate in the global community’s actions to address global excess capacity, including by participating in the OECD Steel Committee meeting scheduled for September 8-9, 2016 and discussing the feasibility of forming a Global Forum as a cooperative platform for dialogue and information sharing on global capacity developments and on policies and support measures taken by governments.”

G20 Leaders Declaration 2016“We recognize that the structural problems, including excess capacity in some industries, exacerbated by a weak global economic recovery and depressed market demand, have caused a negative impact on trade and workers. We recognize that excess capacity in steel and other industries is a global issue which requires collective responses. We also recognize that subsidies and other types of support from government or government-sponsored institutions can cause market distortions and contribute to global excess capacity and therefore require attention. We commit to enhance communication and cooperation, and take effective steps to address the challenges so as to enhance market function and encourage adjustment. To this end, we call for increased information sharing and cooperation through the formation of a Global Forum on steel excess capacity, to be facilitated by the OECD with the active participation of G20 members and interested OECD members. We look forward to a progress report on the efforts of the Global Forum to the relevant G20 ministers in 2017.”

G20 Leaders Declaration 2017“Excess Capacities: Recognising the sustained negative impacts on domestic production, trade and workers due to excess capacity in industrial sectors, we commit to further strengthening our cooperation to find collective solutions to tackle this global challenge. We urgently call for the removal of market-distorting subsidies and other types of support by governments and related entities. Each of us commits to take the necessary actions to deliver the collective solutions that foster a truly level playing field. Therefore, we call on the members of the Global Forum on Steel Excess Capacity, facilitated by the OECD, as mandated by the Hangzhou Summit, to fulfil their commitments on enhancing information sharing and cooperation by August 2017, and to rapidly develop concrete policy solutions that reduce steel excess capacity. We look forward to a substantive report with concrete policy solutions by November 2017, as a basis for tangible and swift policy action, and follow-up progress reporting in 2018.”

Box 2.2: Joint statement by the European Union, Japan, and the United States

11th WTO Ministerial Conference, December 2017“We shared the view that severe excess capacity in key sectors exacerbated by government-financed and supported capacity expansion, unfair competitive conditions caused by large market-distorting subsidies and state owned enterprises, forced technology transfer, and local content requirements and preferences are serious concerns for the proper functioning of international trade, the creation of innovative technologies and the sustainable growth of the global economy.

“We, to address this critical concern, agreed to enhance trilateral cooperation in the WTO and in other forums, as appropriate, to eliminate these and other unfair market distorting and protectionist practices by third countries.”


FIGURE 2.4Big changes in steel demand growth witnessed from 2013 to 2015

Sources for all three panels: WSA, OECD.

https://twitter.com/intent/tweet?text=pic.twitter.com/lwEkdLOic7



https://twitter.com/intent/tweet?text=pic.twitter.com/JGFoEYxQaI



https://twitter.com/intent/tweet?text=pic.twitter.com/5EFfp8WQ6A




trading partners? In short, does the concept of excess capacity provide a sensible basis upon which nations should formulate their contemporary trade policies and upon which the G20 bases joint trade policy initiatives?

Other questions are raised by the G20 broadening the set of policies that can distort markets where goods and services trade across borders. If the objective is to better understand the factors that distort the conditions of competition, is such broadening to be welcomed? If so, what are the implications for the proper monitoring of G20 government’s policy choice? Indeed, does the first major report of the Global Forum on Steel Capacity, published in November 2017, represent a major advance in policy transparency in the steel sector?

More generally, given the Global Forum on Steel Capacity has been in operation for over a year, how well is it doing? Compared to what? After all, the Forum was set up in 2016 which, as Figure 2.2 shows, was after world steel prices started rising again. What is the mechanism by which this

7 Politico.eu. “US Commerce Secretary suggests punitive tariffs on steel”. 16 February 2018.

Global Forum is supposed to work? How is this Forum supposed to work in theory, let alone in practice? Should we endorse or reject the assessment of the US Commerce Secretary, Mr. Wilbur Ross, who said about the Global Forum: “So far, all it’s done is talk a lot”7 ? How could this Global Forum do better? The purpose of this report is to address these questions.

Therefore, this report will use the G20’s foray into the steel sector and into excess capacity to draw broader implications for its trade policy agenda. All of this takes on greater significance because, at their 2018 Summit, G20 Leaders must decide whether its protectionism pledge should be renewed and, if so, what form it should take. After all, is the steel sector the only sector where a broad range of policy interventions have distorted commercial decision-making in ways that threaten the restoration of long term economic growth that the G20 was set up to deliver? Put differently, is the steel sector really that different?


CHAPTER 3 WHAT HAS THE G20 FORUM ON STEEL EXCESS CAPACITY DONE?

8 Hereafter referred to as the Global Forum.

9 Available at https://www.bmwi.de/Redaktion/EN/Downloads/global-forum-on-steel-excess-capacity-report.pdf?__blob=publicationFile&v=1 and referred to here as Global Forum (2017).

10 To the best of our knowledge no more recent reports have been published by the Global Forum.

11 The members of the Global Forum are Argentina, Australia, Austria, Belgium, Brazil, Canada, China, European Union, Finland, France, Germany, Greece, Hungary, India, Indonesia, Italy, Japan, Luxembourg, Mexico, the Netherlands, Norway, Poland, Russian Federation, Saudi Arabia, Slovak Republic, South Africa, South Korea, Spain, Sweden, Switzerland, Turkey, the United Kingdom, and the United States.

12 See Annex 4 of Global Forum (2017).

13 Note that on the front cover of the report appears the following statement “This report has been prepared under the direction of the Chair, based on consultations with Global Forum members and technical support and expertise from the Facilitator (OECD).”

14 This non-disclosure to third parties differs for the publication of reports and making available related datasets by the official monitors of the G20 protectionism pledge. One potentially relevant difference is that the latter monitoring is undertaken by international organisations while the Global Forum report was issued in the name of one of its members, in this case the Chair.

The purpose of this chapter is to summarise salient facts concerning the operation of the Global Forum on Steel Excess Capacity8 from its creation after the Hangzhou G20 Leaders summit in September 2016 until the publication of its first major report9 in November 2017 at the end of the German G20 Presidency.10 The OECD provides the secretariat for the Global Forum, whose members include 33 governments.11 The terms of reference for the Global Forum were approved at a meeting in Berlin on 16 December 2016.12

Other than its first major report, little information is publicly available about the operation and results of this Global Forum. Still, as will become apparent, the approach taken on steel excess capacity has evolved beyond the G20’s treatment of protectionism. The next two sections describe the transparency function of the Global Forum and then the recommendations that have been devised for member governments. The reception of those ideas is then described in the following two sections as divisions emerged at, and after, the November 2017 meeting of the Global Forum.

At this stage, it is worth noting that the Global Forum report was not necessarily a consensus document in the sense that every principle and policy recommendations mentioned therein was agreed to by every forum member. That report should be interpreted accordingly.13

Information collection and exchangeAt Hangzhou, G20 Leaders instructed the Global Forum members to fulfil commitments to information sharing. Such sharing of information is a precondition for monitoring progress towards eliminating excess capacity and the removal of trade distorting policy. It appears that in the first year of operation the Global Forum sought to improve transparency in two ways.

First, disaggregated data on steel capacity developments (opening of new plants, closing of plants etc) was collected from members of the Global Forum and compiled in a database. Such information was both provided and verified by governments, not by any external observers and possibly not by the secretariat of the Forum. Information was then exchanged between the Global Forum members willing and able to furnish such data.

It appears that, apparently for legal reasons, South Africa was unable to furnish disaggregated data and the report notes that “based on the principle of reciprocity, South Africa therefore will be exempted from information sharing and access to the Global Forum members’ disaggregated data” (Global Forum 2017, page 3). Even the implementation of this transparency exercise was conditioned on reciprocity among members. Furthermore, third parties do not appear to have the right to examine the underlying database on capacity developments.14 This is a curious choice should a goal be for this G20 initiative to be seen to be successful.

https://www.bmwi.de/Redaktion/EN/Downloads/global-forum-on-steel-excess-capacity-report.pdf?__blob=publicationFile&v=1


Second, an inventory of policy interventions “with a direct or indirect bearing on excess capacity in the steel sector15” was collected.16 The report notes:

“Such data has been provided at the central government level for all members and at the regional and provincial levels for most members. While much work remains, this is the first time that a policy inventory is being built that goes beyond what is reported in other fora and whose emphasis is on policies relevant for steel. This tangible process contributes to the collective trust and confidence that are necessary to find collective solutions to the challenge of excess capacity.”17

In fact, 31 of the 33 Global Forum members provided data on sub-national government policy interventions affecting the steel sector18. Again, the contents of this policy inventory have not been made public19 but a summary of the members’ responses to the relevant questionnaire are presented on pages 26 to 35 of the Global Forum’s report. That summary has not been written to allow readers to make direct comparisons across Global Forum members.

In the preparation of this report each fact about policies implemented by the 33 members mentioned in the Global Forum’s 2017 report was assembled and compared directly to the information on policies affecting the steel sector in the independently collected Global Trade Alert database. The resulting apples-for-apples comparison can be found in chapter 5 of this report.

Later the report concedes that Global Forum members were more willing to share information on policies facilitating adjustment to steel capacity and market developments than “market-distortive subsidies and other types of support measures provided by government and government-related entities at the central and regional levels of government. Ensuring complete information on relevant government policies is crucial for addressing the challenge of excess capacity” (Global Forum 2017, page 6). The last sentence reads more like an injunction for members to do more than a celebration of an entirely successful information sharing exercise.

15 Global Forum (2017) page 3.

16 In the summary of the policy inventory presented on pages 26-35 of Global Forum (2017) sometimes policies are classified according to their objective and sometimes policies are grouped according to the type of policy intervention used. Either way, the range of policies considered is considerably broader than those highlighted in the official monitoring reports on G20 protectionism.



19 Global Forum (2017) page 26 contains reference to a password-protected platform.


Diagnosis and prescriptionThe Global Forum’s report contains a number of statements concerning the harm done by excess capacity in the steel sector, which it refers to as plaguing the sector (Global Forum 2017, page 2). Arguably the following statement is stronger on the claimed effects of excess capacity than on the mechanisms linking such capacity to adverse outcomes:

“It depresses prices, undermines profitability, generates damaging trade distortions, jeopardizes the very existence of companies and branches across the world, creates regional imbalances, undermines the fight against environmental challenges and dangerously destabilizes world trading relations. It especially undermines income opportunities for employees.”20

As to the state of the steel market at the time the Global Forum report was published (November 2017), the report conceded that the sector experienced moderate growth in 2017 and that the “cyclical recovery” had “broadened” in regional coverage (Global Forum 2017, page 3). However, it argued that long-term demand growth is expected to be weak and that “further significant reductions in global excess capacity will be needed to avoid a prolonged structural crisis in the steel sector” (Global Forum 2017, page 4). On the assumption that a sector cannot be in a recovery and a structural crisis at the same time, the reader is left with the impression that capacity reduction today is needed to head off future potential trouble. Given the recovery of world steel prices in 2016 and 2017 (noted in the last chapter), the question arises as to whether the case for policy change advanced in the Global Forum’s report is compelling enough to sustain reform by members.

As to the nature of this reform, the Global Forum report notes that “to create a common basis for swift and effective action, members agreed on six principles, which will guide governments in their efforts to develop policy solutions…” (Global Forum 2017, page 7). These principles then are not explicit rules as to how states shall act or not act but rather recommendations of a non-binding nature as to how to design policy intervention. The report goes on to note:


“The principles reflect the converging views of members upon three main areas: a) the acknowledgment of the global nature of the excess capacity challenge and the necessity of collective solutions; b) the importance of enhancing market function and encouraging adjustment; c) the need for improving transparency, review and assessment of market developments and steel policies.”21

21 Global Forum (2017) pages 7-8.

22 In fact the word “shall” is not used once in the main text of the entire report, Global Forum (2017). This is a further indication of the non-binding nature of this initiative, like many other G20 initiatives.

The phrase “converging views” does not imply complete agreement, a point reinforced by the vague manner in which each of the six principles are stated. The legally demanding phrase “shall” is not used at all in articulating these principles.22 The weaker term “should” is. Still the principles, which are reproduced in Box 3.1, acknowledge the global nature of the problem of excess steel capacity,

Box 3.1: Six Principles agreed to guide governments in formulating policy responses

I. Global challenge, collective policy solutionsPrinciple: Steel excess capacity is a global issue which requires attention in a global format with broad participation of economies and effective policy solutions to enhance the market function and reduce steel excess capacity. To support these, Forum members may set and publish goals, if appropriate.

II. Enhance market function (1): Refraining from market-distorting subsidies and government support measuresPrinciple: In order to ensure that the steel market operates under market principles, governments and government-related entities should refrain from providing market-distorting subsidies and other types of support measures to steel producers. These include subsidies and other government support measures that sustain uneconomic steel plants, encourage investment in new steelmaking capacity which otherwise would not be built, facilitate exports of steel products, or otherwise distort competition by contributing to excess capacity.

III. Enhance market function (2): Fostering a level playing field in the steel industryPrinciple: Irrespective of ownership all enterprises acting in the steel market (whether privately owned or directly or indirectly owned, fully or in part, by their governments or by government-related entities) should not receive directly or indirectly subsidies or other type of support that distort competition by contributing to excess capacity, and should follow the same regulations with economic implications and rules, including bankruptcy procedures. A level playing field should be ensured among steel enterprises of all types of ownership. Global Forum members should also continue to fight protectionism including all unfair trade practices while recognising the role of legitimate trade defense instruments in this regard.

IV. Enhance market function (3): Ensuring market-based outcomes in the steel industryPrinciple: Open and competitive markets and a market-driven approach to resource allocation based on the competitive positions of steel enterprises should be the driving forces of the steel sector. New investment, production and trade flows should reflect market-based supply and demand conditions.

V. Encouraging adjustment and thereby reducing excess capacityPrinciple: Wherever excess capacity exists, governments have a role in advancing policies that facilitate the restructuring of the steel industry while minimizing the social costs to workers and communities. Governments should ensure conditions exist for market based adjustment, by facilitating the exit of consistently loss-making firms, “zombie” firms, obsolete capacity facilities and firms not meeting environmental, quality and safety standards. This would lead to a net reduction of capacity.

VI. Ensuring greater transparency as well as review and assessment of the implementation of the Global Forum policy solutionsPrinciple: Recognizing that collective policy solutions and transparency are vital for market based responses by the industry to changing conditions in the steel market, governments should on a reciprocal basis increase transparency through regular information sharing, analysis, review, assessment and discussion as well as regular exchanges about data and concrete policy solutions, among the members of the Global Forum. Governments should ensure that any relevant information on steelmaking capacity developments; supply and demand conditions as well as policy responses including support measures by governments and government-related entities is available on an on-going basis. Members should exchange information on the nature and extent of export credit agency support for new steel projects. The Global Forum will report to the G20 and to interested OECD countries being member of the Global Forum on progress.

Source: Global Forum (2017) pages 8-10.


the role that targets can play in tackling this problem, encourages the removal of subsidies and other forms of government support, endorses the level commercial playing field, the centrality of market forces, the need for capacity adjustment to be sensitively handled, and the promotion of transparency.

Having articulated these six principles, the Global Forum’s report goes on to state 28 policy recommendations that offer further guidance to members. Interestingly, the report describes the relationship between these recommendations and a member’s binding commitments as the World Trade Organization (WTO) as follows:

“While acknowledging and fully mindful of WTO Agreements and supporting the WTO Agreement on Subsidies and Countervailing Measures, these recommendations cover all forms of support that distort competition. The Hangzhou and Hamburg mandates cover all market-distorting (1) subsidies and (2) other types of support provided by government or government-related entities. These should be eliminated in cases where they distort competition by contributing to excess capacity—as the Global Forum objective is precisely to address such excess capacity. This applies mutatis mutandis across all policy recommendations. Made in the G20 spirit of voluntary commitments, the policy recommendations include the guiding principles and further build on them as follows.”23

This statement lays bare the potentially far-reaching nature of recommendations of the Global Forum. In the steel sector, at least, there is acknowledgement that all forms of government support that tilt the commercial playing field are problematic, irrespective of whether the support is disciplined by an existing multilateral trade accord. In discussions of protectionism, the G20 has never gone this far.

A house divided?It is unclear that this Global Forum report, which recall was issued in the name of the Chair, is a consensus document that is supported in its entirety by all members of the Forum. In annex 2.B. of the report each member was allowed to make a short statement. In the following statement South Africa essentially requested that it and other African nations be exempted from any commitments or obligations arising from the six principles and 28 policy recommendations:



25 For the full text of this speech see http://pib.nic.in/newsite/PrintRelease.aspx?relid=174054

26 For the full text of this speech see http://pib.nic.in/newsite/PrintRelease.aspx?relid=174054

“SA and countries in the African region have low steel consumption rates with aspirations to develop, grow and create jobs. It is hence important that any corrective measures put in place through the Global Forum do not limit the policy levers of small emerging market economies to preserve and grow our steel industries.”24

India took a different tack calling for “the removal of all WTO non-compliant market-distorting support/incentivizing measures taken by governments and related entities” (Global Forum 2017, page 41). India’s statement is at odds with the Chair’s text calling for removal of all forms of support that distort steel markets. India’s Minister of Steel, Mr. Birender Singh, attended the Global Forum and in a speech reiterated the point:

“On the basis of these six guiding principles the Global Forum made very few key recommendations. While most of the key recommendations in the draft report generally have been agreed by all members there are a few recommendations where some member countries have expressed caution. One such area of concern for India is regarding the basis of prescribing key recommendations. While India agrees that the policy recommendations cover all market distorting subsidies and other types of support provided by Government or Government related entities, there should be acknowledgement of existing WTO agreements. The draft report has indicated support only for the WTO agreement on Subsidies and Countervailing measures which is not sufficient as there is another other support measure sought to be covered in the key recommendations in the progress report which finds mention elsewhere in WTO agreements. It would accordingly be desirable that while making key recommendations, there is acknowledgement of WTO agreements.”25

Minister Singh also made the following remark, which seeks to limit the uses of information provided to and exchanged at the Global Forum:

“The Chairs will need to ensure that the recommendations mentioned in the report are applied in the spirit of the mandate given in the Hangzhou and Hamburg Summits. There is a caution in the process involved that assessment and review of information should be used in the true spirit of cooperation and should not form the basis for trade disputes which as we all understand will jeopardise functioning of this Global Forum.” 26

The latter statement could also be read as a threatening to withdraw cooperation from the Global Forum should information be used in trade disputes. It could also be

http://pib.nic.in/newsite/PrintRelease.aspx?relid=174054


seen as seeking to constrain how Global Forum members use shared information. It would seem even the non-binding approach envisaged by the Chair is too much for at least one member of the Global Forum.

Mixed reception for the November 2017 reportWhile representatives of the European Commission27 and governments of its member states generally welcomed the publication of this report, reaction from the United States government and from other US parties was negative. In a statement the Office of the United States Trade Representative declared that the Forum’s activities had not led to actual policy change. Root causes of steel excess capacity had not been tackled, it was argued, and significant data gaps relating to the policies of certain members of the Forum remained. Furthermore, the United States also criticised the prominence given to setting targets for capacity reduction, choosing to emphasise instead the removal of offending policies.28

The President of the American Steel Manufacturers association was not impressed, stating “While it is good to see the cooperation between countries and to continue diplomatic efforts to deal with this issue, until the forum identifies specific measures, timetables and targets the overcapacity problem will persist.”29 Mr. Axel Eggert, Director General of the European Steel Association (EUROFER), clearly wanted more arguing “The Global Forum must reach a concrete arrangement that will tackle the plague of global overcapacity.”30 The following statement by the United Steelworkers union shows its frustration at the slow pace of deliberation in the Global Forum:

“Two years of dialogue and meetings resulted in a 52-page report and a set of principles that acknowledges there is global steel overcapacity which is continuing to grow. For the participants in the Global Forum, this may be viewed as a victory, but for workers in the steel sector in the United States, it is just another sign that political leaders are fiddling while Rome burns.”

Clearly the Global Forum’s report fell short of the expectations of certain industry stakeholders, some of whom may well have supported the elevation of this matter to the G20 in the first place. Of course, these statements may be tactical, however, there are evidently expectations that the Global Forum must alter government behaviour to be successful.

27 The European Commissioner for Trade, Mrs Cecilia Malmstrom, in a statement on 16 December 2016, even referred to the Global Forum as “an example of a new kind of governance, based on cooperation, to overcome challenges in other industries affected by overcapacity.”

28 This blistering criticism of the Global Forum’s work can be found at https://ustr.gov/about-us/policy-offices/press-office/press-releases/2017/november/ustr-statement-report-global-forum

29 See http://steelnet.org/sma-comments-on-g20-global-forum-on-steel-excess-capacity/

30 See http://www.aist.org/news/steel-news/2017/november/27-november-1-december-2017/steel-summit-on-overcapacity-opens-thursday

The elephant in the room: What mechanism drives results?That expectations are high begs one question never addressed in the Global Forum’s report: how are its activities, as currently designed, expected to work? Of course, much depends on how success is defined. Leaving aside the possibility that the Forum was set up to shift a controversial matter into a technocratic forum so as to bury it (perhaps hoping the steel market will recover in the meantime), what if success does mean actual production capacity reductions or the elimination of trade distorting policies? If so, what is the mechanism established by the Global Forum to induce the appropriate public policy intervention?

Such a mechanism may involve the creation of subtle or blunt incentives. Given the reluctance to date to publish comparable information on state acts in the steel sector and since Forum members are divided as to how such information should be used (recall India’s intervention), then how is a transparency exercise that is not transparent about policy interventions taken supposed to work? And what confidence will external stakeholders have in any mechanism where key pieces of data are missing (if one believes the American criticism) or evidence cannot be verified by third parties?

In the absence of any clearly stated mechanism according to which the Global Forum is supposed to induce policy reform among its members, in the chapters that follow we will benchmark the transparency function of the Forum against known third party data. Furthermore, we will reflect on the very notion of excess capacity as used by the Global Forum contrasting it with its use by economists. More importantly, we will parse the logic and the evidence linking excess capacity to harm to trading partners in the steel sector in particular and more generally across manufacturing sectors. This approach will allow us to assess the value of the Global Forum’s first year of work as well as to examine whether excess capacity is indeed a sensible driver of trade policy choice by G20 members.

ReferencesGlobal Forum (2017). Global Forum on Steel Excess Capacity. Report. 30 November 2017.

https://ustr.gov/about-us/policy-offices/press-office/press-releases/2017/november/ustr-statement-re

https://ustr.gov/about-us/policy-offices/press-office/press-releases/2017/november/ustr-statement-re

http://steelnet.org/sma-comments-on-g20-global-forum-on-steel-excess-capacity/

http://www.aist.org/news/steel-news/2017/november/27-november-1-december-2017/steel-summit-on-overca




CHAPTER 4 HAS THE G20 BROADENED ITS POLICY MONITORING IN THE STEEL SECTOR?

31 The first such report was a joint report by the WTO, OECD, and the United Nations Conference on Trade and Development (UNCTAD) published on 14 September 2009, available at https://www.wto.org/english/news_e/archive_e/trdev_arc_e.htm

32 The decision to treat trade remedies separately as opposed to classifying them as trade restrictions as was the case until last year was in response to pressure from certain G20 governments, as the WTO secretariat has publicly acknowledged in its November 2017 report. A consequence of this change has been to substantially reduce the reported total for trade restrictions imposed by the G20, highlighting how dependent the WTO’s monitoring of import restrictions was on trade remedy investigations.

33 Given how few policy interventions are recorded in the latter category by the WTO secretariat this category is of little import to the discussion here.

34 In its November 2017 report the WTO secretariat observed “reflecting the poor response rate to the request for information on general economic support measures there currently is little basis for maintaining an annex for these types of policies which would provide a balanced and credible account of recent developments in the area of subsidies and general economic support across G20 economies” (page 58).

In this chapter we argue that the answer to this question is yes. Broadened but compared to what? We take as the benchmark the approach taken by the international organisations to monitoring the G20 protectionism pledge and argue that the Global Forum’s approach covers more relevant forms of policy intervention.

We also argue here that there is another difference between these two G20-related monitoring exercises. Namely, that the G20 protectionism monitoring takes a clearer stand on whether a policy is trade distorting whereas the Global Forum’s report does not classify policy interventions. Indeed, while the latter report provides summary statistics on steel capacity and capacity reduction, it provides no such statistics on actual government policy choice.

Ultimately, as far as the design of policy monitoring is concerned the Global Forum’s approach represents one step forward and several steps back.

Range of policy instruments reportedSo that there is no misunderstanding, the argument that follows refers to the range of policy instruments tracked during the implementation of two G20-related monitoring initiatives on commercial policy and not to the broad statements of principle articulated in the G20 Leaders Declarations on related matters. Following the dictum “what gets measured gets managed,” what matters is how the fine words in G20 summit declarations get translated into monitoring of government policy choice.

A sensible benchmark for the Global Forum’s monitoring of policy choice in the steel sector is the monitoring by the international organisations of commercial policy choice by G20 members, in particular the monitoring of the WTO. In their April 2009 London Summit Leaders’ Statement, the G20 called on the WTO and other international organisations to monitor on a quarterly basis their adherence to the pledge to refrain from protectionism.

Those organisations duly delivered reports.31 The WTO’s reports contain a wealth of information but the headline numbers relate to a restricted set of trade restrictions implemented during the defined reporting period: those deemed trade facilitating, those deemed trade restrictive, and trade remedy measures (which at this time are treated separately32). Specifically, the policy instruments included in the WTO’s headline numbers are changes to import tariffs, other import taxes, import quotas and other quantitative restrictions, export taxes, other export duties, export quantitative restrictions, local content requirements and a catch all “other” category relating to trade restrictions other non-local content requirements.33

Until last year, the WTO reports included an annex on “General Economic Support Measures,” which were taken to be government stimulus packages and, in more recent years, subsidies offered to firms. Lack of cooperation from many G20 governments resulted in this annex—and therefore subsidy-related information—being dropped from WTO monitoring, a clear step backwards as far as promoting transparency is concerned.34

https://www.wto.org/english/news_e/archive_e/trdev_arc_e.htm


Overall, then, at this time at least as far as its headline numbers are concerned, the WTO’s monitoring focuses principally on traditional policies that limit trade. Subsidies are not reported anymore in a separate annex and anyway did not contribute to the headline numbers reported by the WTO secretariat.

Interestingly, G20 officials have taken a different approach when it came to the woes of the steel sector. The statement issued after the July 2016 meeting of G20 Trade Ministers is typical in that it perceives a wider range of policies, in particular subsidies, as relevant to addressing the excess capacity in the steel sector:

“We recognize that excess capacity in steel and other industries is a global issue which requires collective responses. We also recognize that subsidies and other types of support from governments or government-sponsored institutions can cause market distortions and contribute to global excess capacity and therefore require attention. We commit to enhance communication and cooperation, and take effective steps to address the challenges so as to enhance market function and encourage adjustment.”

For the present discussion what is relevant is that, in the preparation of the Global Forum’s report, this intent was translated into the first G20-related attempt at data collection on members’ policy choices in the steel sector.35 Specifically, the secretariat of the Global Forum sought information on:

• Policies to reduce steel production capacity and to facilitate associated corporate restructuring and adjustment.

• Policies to expand steelmaking capacity and any associated upgrading or innovation (often as part of national industrial or development policy).

• Policies “aimed at maintaining the domestic production base” including “incentives to promote investments in steel-intensive infrastructure, measures with a specific policy intent to boost steel demand in downstream sectors, trade-related measures applied to fairly traded imports, the introduction of tariff rates on certain steel products, tax concessions as well as government procurement policies requiring domestic steel content” (Global Forum 2017, page 6).

• Policies relating to the relief of steel companies social obligations and obligations to financial institutions, including bailouts of various types.

35 Recall that the OECD Steel Committee has usefully been collecting information on policy intervention affecting the steel sector for many years.

36 This is not to imply that every policy intervention implemented in the steel sector must be discriminatory. Rather, the argument is that there is no reason a priori to exclude such interventions from a monitoring initiative. Indeed, to the extent that a policy intervention attains a legitimate public policy goal (such as improving the physical environment or reducing pollution) without resort to discrimination, then a monitoring exercise that identifies such intervention may provide information that is useful for other governments to consider. In this manner monitoring can, in principle, highlight better practice government intervention not just harmful or protectionist actions.

• Policies to support the steel sector to comply with environmental standards.

• Provision of state export credits, finance or other incentives for steel producers.

• Policies relating to foreign direct investment in the steel sector.

• Policies that treat state-owned steel producers differently from private sector steel producers.

The set of policies the G20 deemed relevant to address the woes of the steel sector is markedly wider than those considered relevant when monitoring adherence to the G20 pledge on protectionism. Given the policies listed above can discriminate against foreign steel producers in favour of domestic rivals, potentially altering market outcomes and the fortunes of those firms, then in principle36 there is a compelling logic for their inclusion in a serious G20 monitoring exercise. As such, the G20 steel monitoring initiative is a step forward over the official monitoring of the G20 pledge on protectionism.

Acquisition, classification, and presentation of information on policy choiceThe range of policies considered is not the only difference between the G20 monitoring of protectionism and recent monitoring of policy choice in the steel sector. An exercise that seeks to promote transparency of government choice must make important design choices with respect to the acquisition, classification, and presentation of information. Here there are clear differences in approach between the Global Forum’s steel sector monitoring and the monitoring of compliance with the G20 pledge on protectionism.

With respect to acquisition of information about policy choices, the Global Forum’s report suggests that it sends out a questionnaire with a pre-specified template to members of the Forum. In contrast, the WTO secretariat checks notifications from relevant member governments, checks government websites, and notices announcements of policy change in the media or in specialist industry publications. Once information on a government measure is identified, the WTO secretariat seeks verification of that information from the relevant government.

Both approaches have their flaws. The approach taken in producing the Global Forum’s report was to rely on information provided by member governments. As noted


in the last chapter, information provision on subsidies and other forms of market support was acknowledged by the report’s author as weaker than for other policies. Moreover, official US reaction to the report’s publication suggested that the information obtained in this manner was incomplete. In contrast, the verification approach taken by the WTO secretariat provides governments with a tool to frustrate or delay monitoring should they wish, a point the WTO secretariat delicately notes in its own November 2017 report.37

The intelligent classification of policy intervention into classes or groups of intervention is a first step in the production of meaningful summary statistics that facilitate comparison and transparency. The WTO secretariat has been prepared to classify traditional trade policies other than trade remedies as either trade facilitating or trade restrictive, which at least allows for both intertemporal and cross-sectional comparisons of what are a narrow set of public policies.

While the Global Forum report includes interesting statistics on steelmaking capacities of Forum members, on plant closures and plant openings, as well as on utilisation rates, no systematic attempt was taken in its November 2017 report to present summary statistics on the resort to different types of government policy intervention in the steel sector or to the differential resort to policy intervention across the Forum’s members.

Furthermore, since it is unclear over what time frame governments are reporting their policy changes, then year-by-year comparisons are impossible. Indeed, the information presented in the Global Forum’s report cannot be used to make any case concerning the relationship between policies undertaken and the steel price collapse in 2014 and 2015. Put differently, given the paucity of relevant information on policy choice presented in the

37 The relevant quotation can be found on page 8 of that report “Initial responses to the Director-General's request for information were received from all G20 delegations. These data, as well as information collected from other sources, were returned for verification. However, in several cases the Secretariat received only partial responses, and often significantly after the indicated deadline. While this may have prevented the Secretariat from fully taking into account the information submitted, such information will be reflected in the Director-General's Annual Report for the Overview of Developments in the International Trading Environment which will be circulated in mid-November 2017. Where it has not been possible to confirm the information, this is noted in the Annexes.”

38 The WTO Trade Monitoring Database is available at http://tmdb.wto.org/

Global Forum’s report, a compelling case cannot be made that certain policy interventions created the very excess capacity the Global Forum is supposed to fix.

With respect to the presentation of information, there are clear advantages to the approach taken by the WTO secretariat in its monitoring of G20 protectionism over the Global Forum’s approach in the steel sector. One feature of the WTO’s monitoring was the production of annex tables in its reports of government policy interventions undertaken during each reporting period. Another feature was the creation of an online database38 of crisis-era policy change, from which G20 policy changes can be easily extracted. The WTO secretariat has also created an Excel file of each G20 member’s policy choices, which it updates from time to time and which further facilitates comparisons. None of this has been done by the Global Forum.

One step forward, several steps back for monitoring policy choiceThat the Global Forum took a broader view of the range of policies that can distort markets in the steel sector is to be welcomed. The focus of G20 official monitoring on a narrow (and over time narrower) range of policy instruments misses many of the policy developments relevant to the steel sector and the members of the Global Forum were wise to take a broader approach.

This advance, however, has also been associated with design choices relating to the acquisition, classification, and presentation of information on policy choice by the members of the Global Forum that represent major steps backwards from the approach taken by the WTO secretariat in its monitoring of G20 trade policy choice. While it could be argued that the Global Forum is still finding its feet, it cannot claim at this time to be a serious exercise in promoting transparency of government policy choice in the steel sector.

http://tmdb.wto.org/


CHAPTER 5 HOW INCOMPLETE IS THE GLOBAL FORUM’S MONITORING OF MEMBERS’ POLICY CHOICE?

39 We cannot rule out the possibility that there may have been types of policy intervention or governmental objective that the Global Forum collected data on and did not include in Annex 1 of its November 2017 report.

Notwithstanding the reservations expressed in the last chapter, the question still remains how useful is the data on policy choice contained in the November 2017 report of the Global Forum? One objective of a monitoring exercise, surely, is to provide as complete a set of information as possible and so the purpose of this chapter is to compare the quantum of information contained in that report with that found in another publicly available source.

A systematic comparison may be instructive, not least as it could reveal which governments have submitted less information to the secretariat of the Global Forum. After all, if the WTO secretariat has difficulties getting G20 members to cooperate in the data verification process in its monitoring of protectionism and trade reform, then one ought to be open to the possibility that the Global Forum’s secretariat may have difficulty securing cooperation from its members in the submission of relevant information about policies affecting the steel sector.

From questionnaire to member-by-member responses Having collected responses to a questionnaire from its 33 members concerning their policies towards the steel sector, the Chair’s report of the Global Forum then summarised the responses to 16 questions in a novel manner. Rather than reproduce each member’s responses verbatim or even publish summary information member-by-member in a comparable way, summaries of the responses to each question, frequently using pie charts, were presented on pages 26-35 of Global Forum (2017). The information contained in the pie charts was limited by the fact that many of them did not report the underlying number of interventions.

Annex 2 of the Global Forum (2017) report contained statements from many of the Forum’s member governments. These statements do not follow any particular form or address the same subject matter. Even so, these statements may contain useful insights.

Our goal here is to assemble as much information as we can from the questionnaire responses (summarised in Annex 1) and from Annex 2 and present that information in a manner that is comparable across countries. Table 5.1 summarises which countries responded in the questionnaire affirmatively to having different types of public policy objectives or interventions affecting the steel sector. Table 5.2 summarises the information provided in Annex 2 by the 27 Forum members that chose to offer statements for publication in the Global Forum’s report.

Constructing Table 5.1 is instructive as it reveals which governments acknowledge implementing different types of measure since 2009 which relate to the steel sector. It appears that Argentina, Brazil, Norway, and Switzerland have not implemented any of the 17 different policy interventions that the Global Forum chose to report on in November 2017.39 Unfortunately, the reader of the Global Forum report does not know if the governments of these four nations did not submit any information at all or if they confirmed that they have not implemented any of these policies since 2009.

Interestingly, no member of the Global Forum claimed to have implemented policies that limit foreign direct investment into the steel sector. In contrast, 23 Forum members reported implementing policy measures to support industry upgrading or innovation. Twenty-two members reported having national development plans for their steel sector, an indication potentially of the sensitivity of this sector. Twenty-one members said they have taken steps to ease the closure of steel plans.


Eight Global Forum members report taking steps to shore up the domestic production base of their steel sectors, a broad category that includes tax breaks, action against dumped and subsidised imports, and government procurement measures that seek to bolster the demand for steel. Japan and the United States were the only Forum members to acknowledge providing export credits to their steel sectors, even though the latter claims not to have done so for the past three years. Only China reported having targets to reduce steel production capacity and to limit the addition of new steel plants.

Overall, China acknowledged having 12 of the 17 different steel sector state policy measures identified by the Global Forum, more than any other member. Indonesia acknowledged 11 such public interventions or objectives, South Africa nine and India eight.40 In contrast, the United States acknowledged four policy interventions or objectives relating to the steel sector.

Looking across Table 5.1 and the statistics presented above a warning is in order: before inferring that governments differ markedly in the manner and frequency with which they intervene in the steel sector, it should be borne in mind that the degree to which members of the Global Forum cooperated with this information gathering

40 The counts for these developing economies are higher because five of the reported questions in Annex 1 relate to the state-owned steelmakers, which these countries have. No other Global Forum members answered these questions in the affirmative (suggesting they have no distinct policies towards state-owned steel firms.)

exercise might have varied also. Furthermore, it would be unwise to conclude on the basis of the information presented in the Global Forum’s report that a government takes a relatively laissez faire attitude to its national steel sector just because there are few entries in Table 5.1.

A little more nuance is provided by examining Table 5.2. In its own statement, Korea, for example, said it had taken steps to decrease excess capacity but, according to Table 5.1, it has set no targets to do so. Austria noted in Annex 2 the role that antidumping actions taken by the European Union had helped reverse steel price trend, but did not recognise these actions as measures to support the domestic production base (hence the absence of the relevant entry in Table 5.1).

As the Austrian example demonstrates governments may not have fully understood the Global Forum’s questionnaire, or thought they understood it but made inappropriate assumptions, or they may have assumed that the action taken was by another level of government and would be reported by the latter (the European Union in the Austrian case.) Examples such as these do little to build confidence in the “inventory” of policy intervention that the Global Forum has collected.


TABLE 5.1 Self-identification by Forum members of different steel sector policy interventions (Questions 2.1 to 2.8)

Global Forum member

Targets for reducing

crude steel capacity set since 2009 (Question

2.1)

Policies to limit addition

to steel capacity

(Question 2.2)

Government objective to build steel capacity

over next 5-15 years (Question

2.3)

Measures to facilitate the closure

of plants (Question

2.4)

Measures to support the

domestic production

base (Question

2.5)

Provision of export credits

for steel products (Question

2.6)

Corporate restructuring policies and measures (Question

2.7)

Industry upgrading

and innovation (Question

2.8)

Argentina

Australia Yes Yes Yes

Austria Yes Yes

Belgium Yes Yes

Brazil

Canada Yes Yes Yes

China Yes Yes Yes Yes Yes Yes

European Union Yes Yes

Finland Yes Yes

France Yes Yes

Germany Yes Yes

Greece Yes Yes

Hungary Yes Yes

India Yes Yes Yes

Indonesia Yes Yes Yes Yes Yes

Italy Yes Yes

Japan Yes Yes

Korea Yes Yes Yes

Luxembourg Yes Yes

Mexico Yes

Norway

Netherlands Yes Yes

Poland Yes Yes

Russian Federation

Saudi Arabia

Slovak Republic Yes Yes

South Africa Yes

Spain Yes Yes

Sweden Yes Yes

Switzerland

Turkey

United Kingdom Yes Yes

United States Yes Yes Yes

Total number of responses 1 1 2 21 8 2 4 23

Source: Assembled from Annex 1 of Global Forum (2017).


TABLE 5.1 (CONTD.) Self-identification by Forum members of different steel sector policy interventions (Questions 2.9 to 2.12)

Global Forum member

Ensuring compliance of steel-producing

facilities with environmental

standards (Question 2.9a)

Provision of financial support related to

compliance of steel-producing facilities with environmental standards listed in

Question 2.9a (Question 2.9b)

Limitation of FDI in the steel sector (Question

2.10)

Operation of state-owned steel enterprises

in the economy (Question 2.11)

Same reporting requirements for state-owned and private steel

firms (Question 2.12)

Argentina

Australia Yes Yes

Austria

Belgium

Brazil

Canada

China Yes Yes Yes

European Union

Finland

France

Germany

Greece

Hungary

India Yes Yes Yes

Indonesia Yes Yes Yes

Italy

Japan

Korea Yes

Luxembourg

Mexico Yes

Norway

Netherlands

Poland

Russian Federation Yes

Saudi Arabia

Slovak Republic

South Africa Yes Yes Yes

Spain

Sweden

Switzerland

Turkey Yes Yes

United Kingdom

United States Yes

Total number of responses 10 2 0 4 4



TABLE 5.1 (CONTD.)Self-identification by Forum members of different steel sector policy interventions (Questions 2.13 to 2.16)

Global Forum member

Government seeks same rates of return for state-owned

steel firms as private sector (Question 2.13)

Explicit guidelines or targets for disbursement of dividends

by state-owned companies (Question 2.14)

Alignment of state-owned steel companies with national development plan (Question

2.15)

National strategies or development plans for the

steel industry (Question 2.16)

Argentina

Australia

Austria Yes

Belgium Yes

Brazil

Canada

China Yes Yes Yes

European Union Yes

Finland Yes

France Yes

Germany Yes

Greece Yes

Hungary Yes

India Yes No Yes

Indonesia Yes Yes Yes

Italy Yes

Japan

Korea

Luxembourg Yes

Mexico

Norway

Netherlands Yes

Poland Yes

Russian Federation Yes

Saudi Arabia

Slovak Republic Yes

South Africa Yes Yes Yes Yes

Spain Yes

Sweden Yes

Switzerland

Turkey Yes

United Kingdom Yes

United States

Total number of responses 4 4 1 22



TABL

E 5.

2In

form

atio

n ex

trac

ted

from

gov

ernm

ent s

tate

men

ts in

Ann

ex 2

of G

loba

l For

um (2

017)

Glo

bal F

orum

mem

ber

Prov

ided

any

in

form

atio

n on

cur

rent

st

ate

of th

e st

eel

indu

stry

Prov

ided

info

rmat

ion

of

plan

t clo

sure

s

Ackn

owle

dgem

ent

of a

ctiv

e st

eel

polic

ies

(oth

er th

an

rest

ruct

urin

g)

Ackn

owle

ged

rest

ruct

urin

gAd

vers

e co

nseq

uenc

es

in r

ecen

t yea

rsM

easu

res

to d

ecre

ase

exce

ss c

apac

ity

Men

tion

ed e

mpl

oyee

re

trai

ning

pro

gram

mes

Arge

ntin

aAu

stra

liaYe

sN

o

Aust

ria

Yes

Yes

(ant

idum

ping

)Ye

sIn

com

e lo

sses

of 1

80

mill

ion

EUR

Belg

ium

Yes

Yes

No

Yes

Braz

ilYe

s(Y

es)

Cana

daYe

sYe

sYe

s (a

ntid

umpi

ng)

Yes

Empl

oym

ent l

osse

s of

17

,000

(42%

) sin

ce 2

001

Chin

aYe

sYe

sYe

sYe

sYe

s

Euro

pean

Uni

onYe

s(Y

es)

(Yes

) - o

ther

cou

ntri

es’

acti

ve p

olic

ies

Yes

Yes

Finl

and

Yes

Fran

ceYe

s(Y

es)

Ger

man

yYe

sYe

s

Gre

ece

Yes

Yes

Yes

Empl

oym

ent l

osse

s of

1,

600

(53%

) sin

ce 2

009

Hun

gary

Yes

Indi

aYe

sYe

sIn

done

sia

Yes

Yes

Ital

yYe

sYe

sJa

pan

Yes

Yes

Yes

Kore

aYe

sYe

sYe

sYe

sLu

xem

bour

gYe

s(Y

es)

Mex

ico

Nor

way

Net

herl

ands

Yes

Yes

Yes

Pola

ndYe

sYe

sRu

ssia

n Fe

dera

tion

Yes

Yes

Saud

i Ara

bia

Slov

ak R

epub

licYe

s(Y

es)

No

Sout

h Af

rica

Yes

Yes

Spai

nYe

sYe

s(N

o)Ye

s28

% p

rodu

ctio

n re

duct

ion

sinc

e 20

07Sw

eden

Yes

Swit

zerl

and

Turk

ey

Uni

ted

King

dom

Yes

Yes

No

Yes

55%

red

ucti

on in

sup

ply

sinc

e 19

98

Uni

ted

Stat

esYe

sYe

sN

oN

o33

% o

f job

s lo

st in

last

2

deca

des

Sour

ce: A

ssem

bled

from

Ann

ex 2

of G

loba

l For

um (2

017)

. A s

tate

men

t in

brac

kets

is o

ne th

at c

an b

e re

ason

ably

infe

rred

from

the

rele

vant

text

in A

nnex

2. S

tate

men

ts w

ithou

t br

acke

ts w

ere

mad

e ex

plic

itly.


TABL

E 5.

3M

any

trad

e di

stor

tions

in th

e st

eel s

ecto

r im

pose

d si

nce

2009

wer

e no

t rep

orte

d by

G20

mem

bers

to th

e G

loba

l For

um

G20

mem

ber

D C

onti

ngen

t tr

ade-

prot

ecti

ve

mea

sure

s

E1 N

on-

auto

mat

ic

impo

rt-

licen

sing

pr

oced

ures

ot

her

than

au

thor

isat

ions

fo

r SP

S or

TBT

E2 Q

uota

s

E3

Proh

ibit

ions

ot

her

than

for

SPS

and

TBT

E6 T

ariff

-rat

e qu

otas

(TRQ

)

F7 In

tern

al

taxe

s an

d ch

arge

s le

vied

on

impo

rts

G F

inan

ce

mea

sure

s

I1 L

ocal

co

nten

t m

easu

res

L Su

bsid

ies

(exc

ludi

ng

expo

rt

subs

idie

s un

der

P7)

M p

ublic

pr

ocur

emen

t re

stri

ctio

n

P5 E

xpor

t ta

xes

and

char

ges

P7 E

xpor

t su

bsid

ies

P8 E

xpor

t cr

edit

sP1

1 Ex

port

pr

ohib

itio

n

Impo

rt

tari

ff

incr

ease

s

Dis

crim

inat

ory

FDI m

easu

res

Arge

ntin

a

Au

stra

lia

Be

lgiu

m

Br

azil

Cana

da

Ch

ina

Euro

pean

Uni

on

Fr

ance

Ger

man

y

In

dia

Indo

nesi

a

It

aly

Japa

n

M

exic

o

N

orw

ay

Po

land

Repu

blic

of

Kore

a

Russ

ia

Sa

udi A

rabi

a

So

uth

Afri

ca

Sp

ain

Turk

ey

U

nite

d Ki

ngdo

m

U

nite

d St

ates

Not

e: G

reen

indi

cate

s po

licy

inte

rven

tion

iden

tified

in G

loba

l For

um (2

017)

rep

ort.

Red

indi

cate

s di

scrim

inat

ory

polic

y in

terv

entio

n fo

und

in G

loba

l Tra

de A

lert

dat

abas

e bu

t not

in

the

Glo

bal F

orum

(201

7) r

epor

t. O

nly

polic

y in

terv

entio

ns im

plem

ente

d si

nce

2009

wer

e us

ed to

con

stru

ct th

is ta

ble.

Cel

ls fo

r th

e Eu

rope

an U

nion

mem

ber

stat

es d

o no

t dup

licat

e EU

-wid

e ac

tions

take

n by

the

Euro

pean

Com

mis

sion

.


Benchmarking the Global Forum’s reporting against an independent alternativeAnother way to assess the completeness of the information supplied by governments to the Global Forum about their interventions in the steel sector is to compare it with an independent, alternative source of information. The Global Trade Alert (GTA) database, over 93% of whose entries are based on official documentation of state acts, contains information on actions taken by governments (both liberalising and discriminatory) since November 2008 in the steel and other sectors of national economies.

Using information on entries from the GTA database that implicate the steel sector41 for each of the G20 members it is possible to identify which discriminatory policy interventions fall into the different categories of non-tariff measures in the United Nations MAST classification or are import tariff increases or restrict or otherwise harm foreign direct investors in the steel sector. The information so assembled can be compared with the policy interventions reported by governments to the Global Forum.

Table 5.3 summarises that comparison. The green cells in that table show where a class of policy instrument was acknowledged as employed by a G20 member in the Global Forum report. The red cells in Table 5.3 show where a policy instrument was used by a G20 member that harms foreign commercial interests, that is reported in the GTA database, but that is not reported in the Global Forum report. If the latter has as much information on harmful policy intervention at the GTA there should be very little red in Table 5.3. In fact, the opposite is true.

41 This includes policy interventions that target not only the steel sector but other sectors as well. It is legitimate to include such multi-sector interventions in this analysis because they still affect the steel sector and because some of the examples of public policy interventions given in the Global Forum report are multi-sectoral as well.

42 One can make that point without endorsing anything else about current US trade strategy towards the steel sector.

G20 governments have substantially under-reported the amount of discrimination they are engaged in against foreign commercial interests. Our concern here is not whether a government should or should not have engaged in discrimination, our concern is that this information was not supplied to the secretariat of the Global Forum or, if it was, that information was censored from the Chair’s report of the Global Forum.

Provision of domestic subsidies, subsidies for export, import tariff increases, public procurement restrictions, non-automatic licenses, and trade remedy measures (referred to as contingent protection in the MAST taxonomy) undertaken by many G20 members in the steel sector do not appear in the Global Forum’s report of November 2017. Argentina, Brazil, and India have used as many (if not more) classes of non-tariff barrier and import tariff increases to favour their domestic steel producers as China.

In sum, the United States had a point when it argued that the Global Forum report was incomplete.42 While a perfect inventory of government intervention in the steel sector is probably beyond reach, on the basis of the evidence presented here, there must be concerns that the Global Forum’s information collection and dissemination practices on policy choice falls short and potentially undermines any resulting diagnosis of the root causes of the steel sector’s woes.

ReferencesGlobal Forum (2017). Global Forum on Steel Excess Capacity. Report. 30 November 2017.




CHAPTER 6 WHAT PERCENTAGE OF STEEL TRADE FACES TRADE DISTORTIONS? OF WHAT KIND?

43 It should not be forgotten that other metrics are possible. After all, discriminatory policy instruments can distort domestic resource allocation, harm domestic buyers of steel, as well as distort resource allocation abroad.

Since the Global Forum report provides insufficient detail on when trade distortions were imposed in the steel sector, which nations were responsible for them, and the policy instruments used to distort steel trade, the purpose of this chapter is to lay out these facts using data from the independent Global Trade Alert database. The evidence presented in this chapter sheds light on—from the perspective of potentially distorting international trade flows43—which beggar-thy-neighbour policies matter in the steel sector.

This chapter starts by laying out the facts concerning the number of liberalising and discriminatory (protectionist) policy instruments implemented each year and then presents and interprets statistics on the share of steel exports by Global Forum members affected by different types of trade distortion.

Steel sector protectionism surged in 2015 and 2016Members of the Global Forum have consistently sought to tilt the commercial playing field against foreign steel suppliers well before world steel prices reached their nadir in 2015. As Figure 6.1 shows, since the onset of the global economic crisis at least 60 new discriminatory (or protectionist) interventions have been implemented each year by Global Forum members, with the annual total nearly reaching 120 in 2016.

Some G20 members contend, however, that trade remedy measures that seek to redress apparent unfair trading practices should not be counted towards these totals. Figure 6.1 shows what the total number of discriminatory measures would have been if trade remedies were excluded—the annual resort to protectionism still rose consistently from 51 new interventions in 2010 to 81 new interventions in 2015. However measured, far more

protectionist interventions were implemented each year than liberalising ones. Over time, then, the steel sectors in Global Forum members became more and more distorted by government intervention.

Given the sustained resort to protectionism shown in Figure 6.1 one might be puzzled by the flurry of diplomatic and lobbying activity in 2015 and 2016. Or, on the basis of the evidence presented in Figure 6.1, one might question whether the low steel prices observed in 2015 induced a distinctive policy response. Once it is acknowledged that there are reporting lags—that those documenting protectionism have had more time to find and write up protectionism that took place in earlier years—then this puzzle can be solved.

Let’s consider the quantum of protectionism and liberalisation that was documented within 12 months of the start of each year from 2009 on. Figure 6.2 plots the total number of discriminatory interventions (with and without trade remedies) and liberalising interventions that were implemented and documented between 1 January and 31 December of each year, 2009-2017. Correcting for reporting lags in this manner reveals the surge in resort to protectionism in the steel sector during the years 2014 to 2016 and a substantial fall off in new discrimination in 2017.

Consequently, it does make sense to refer to a protectionist episode in the steel sector from 2014 to 2016. Notice this conclusion stands whether or not trade remedy measures are excluded from the annual totals. Put another way, the surge in protectionism in the steel sector in recent years is not only a trade remedy response to pre-existing unfair trading practices, as some might frame it. Certain Global Forum members may have used the scare of low steel prices to discriminate further in favour of domestic steelmakers—not “just” to counter the alleged trading practices of other nations with trade remedy cases.


FIGURE 6.1Leaving aside the fuss over trade remedies, between 60 to 80 other beggar-thy-

neighbour measures are imposed in the steel sector per annum

Source: Global Trade Alert. The totals presented here include all information available in April 2018 and do not correct for reporting lags (hence the fall off in totals reported for 2017 and 2018). Data for 2008 is based on the number of policy interventions implemented during November and December 2008 and, to be comparable with subsequent years, has been annualised.

FIGURE 6.2Correcting for reporting lags shows the surge in steel sector protectionism in 2015 and 2016

Source: Global Trade Alert. Totals presented here relate to the number of measures documented by 31 December of the year in question. Other than 2018, this neutralises differences across years in the time to identify and document liberalising and protectionist measures.

https://twitter.com/intent/tweet?text=pic.twitter.com/3maWHceW6H



https://twitter.com/intent/tweet?text=pic.twitter.com/sMRyISzIBj




TABLE 6.1The US stands out in terms of frequency of steel sector policy intervention and Argentina,

Brazil, China, and Indonesia have the least discriminatory policy mix

Global Forum memberTotal number of discriminatory

(protectionist) interventions implemented since November 2008

Total number of liberalising interventions implemented since

November 2008

Share of interventions implemented that are discriminatory (protectionist)

Argentina 23 17 0.58

Australia 25 0 1.00

Austria 40 6 0.87

Belgium 41 6 0.87

Brazil 29 23 0.56

Canada 34 4 0.89

China 21 19 0.53

Finland 40 6 0.87

France 44 6 0.88

Germany 45 6 0.88

Greece 40 6 0.87

Hungary 40 6 0.87

India 89 9 0.91

Indonesia 26 25 0.51

Italy 42 6 0.88

Japan 13 1 0.93

Luxembourg 40 6 0.87

Mexico 27 5 0.84

Netherlands 40 6 0.87

Norway 1 0 1.00

Poland 41 6 0.87

Republic of Korea 7 0 1.00

Russia 34 13 0.72

Saudi Arabia 21 1 0.95

Slovakia 40 6 0.87

South Africa 16 3 0.84

Spain 42 6 0.88

Sweden 40 6 0.87

Switzerland 0 0

Turkey 24 10 0.71

United Kingdom 51 6 0.89

United States 379 6 0.98

Source: Global Trade Alert. Data for each EU member state listed includes policy interventions implemented EU-wide by the European Commission.


Global Forum members differ markedly in their resort to protectionismThe frequency with which governments have discriminated against foreign steelmakers and the mix between protectionist and liberalising measures implemented varies considerably across Global Forum members. Through repeated public procurement interventions, that seek to increase demand for locally produced steel, the United States stands out as the most frequent discriminator against foreign steel producers. With 379 discriminatory policy interventions implemented since November 2008 that affect the steel sector, the United States is a long way ahead of India, whose 89 protectionist acts in this sector put it in second place.

When it comes to the policy mix between liberalising and protectionist measures, some surprising findings emerge. Although much maligned by trading partners, it turns out that nearly half of Chinese interventions in the steel sector favour foreign firms.44 Argentina, Brazil, and Indonesia too have high shares of policy interventions that are liberalising.

Before making too much of these intervention counts and shares, however, it is worth recalling that the impact of each intervention is what really matters, both on domestic resource allocation and foreign trading partners. Still, a complete picture does require recognition of the impact of liberalising measures.

Turning now to the frequency of policy intervention affecting steel production and trade, two forms stand out and both of them are non-tariff measures. Measures to increase the demand for domestically produced steel by insisting that bidders for government contracts source locally have been deployed by Global Forum members just under 300 times since the first G20 Leaders summit in November 2008 (see Table 6.2).

The second most used intervention are what the UN MAST classification refers to as contingent trade protection, that is measures against dumped imports, subsidised imports, and import surges. On 271 occasions Global Forum members have resorted to contingent protection in the steel sector since November 2008.

Despite the attention given to domestic subsidies in debates over excess steel capacity, Global Forum members have resorted to such state aid less than a quarter of the times they have resorted to discrimination through government procurement (71 times to be precise.) Interestingly, Global Forum members have resorted to measures to promote steel exports more

44 Further examination of these Chinese liberalising measures documented in the Global Trade Alert database reveals that they relate to changes to import and export policies towards steel trade and not to the scaling back of cash grants and other non-export-related subsidies to Chinese steelmakers.

45 The relevant HS codes (relating to steel product categories) being the same ones used by the OECD secretariat.

often than measures to bail out domestic steel producers, suggesting that deliberations over the impact of trade distortions should not be confined to the import side of the trade balance.

One interesting finding in Table 6.2 is that Global Forum members have lowered import tariffs more often than they have raised them (although the frequencies of intervention are almost equal.) Likewise, for import licensing regimes and resort to import quotas. The policy mix for these public interventions is far less skewed towards protectionism than in the case of contingent protection, public procurement, state aids, and export incentives.

While trade remedies and public procurement discrimination are more numerous, domestic and export subsidies dominate export coverageDecisionmakers and analysts may also be interested in the scale of steel trade affected by discriminatory or protectionist measures implemented over the past 10 years. After all, much commentary—often by interested parties—on the woes of the steel sector argues or implies that it is beset by beggar-thy-neighbour activity and that protectionism in the sector is pervasive. If so, this ought to show up in the shares of imports or exports potentially affected by policy-induced trade distortions.

Often, when this matter is addressed, so-called import coverage ratios are calculated that seek to estimate the scale of imports affected by discriminatory polices implemented by governments. Governments may, however, be interested in how much their exports face foreign trade distortions, not just in the importing country but by third party governments that offer, for example, export incentives. For this reason, using disaggregated steel trade data45 from the United Nations COMTRADE database, for each year from 2009 to 2017 we calculated the share of the total exports by Global Forum members that compete against one or more trade distortion in markets worldwide.


TABLE 6.2Governments tilt the commercial playing field in the steel sector using non-tariff measures

MAST Chapter or other policy instrument

Total number of discriminatory/

protectionist interventions implemented

Total number of liberalising interventions implemented

Total number of implemented

interventions

Share of total interventions that are

liberalising

D - Contingent trade protection 271 0 271 0.00

E - Non-automatic licensing, quotas 16 20 36 0.56

F - Price control measures 1 1 2 0.50

G - Finance measures 1 0 1 0.00

I - Trade-related investment measures 5 2 7 0.29

L - Subsidies (except export subsidies) 71 3 74 0.04

M - Government procurement 297 5 302 0.02

P - Export measures 79 11 90 0.12

Instrument unclassified 7 7 14 0.50

FDI measures 4 3 7 0.43

Import tariff changes 81 88 169 0.52

46 To avoid endogenity problems—that is, the reported trade rising or falling because of public policy intervention—we use pre-global economic crisis shares of world steel trade is calculating the reported percentages underlying Figure 6.3.

47 Further information about how these export shares are calculated are available upon request.

Our calculations only include trade distortions imposed after the first G20 Leaders Summit in November 2008 and take account of the phase out or removal of any policies.46 Moreover, we take special care to make sure that only the markets affected by a particular trade distortion count towards the reported totals. Therefore, a non-export subsidy to an Indian steelmaker is assumed to affect conditions of competition in the Indian steel market but not overseas markets. We have refined these techniques over the past years, adopting conservative assumptions along the way that almost certainly understate the share of exports affected by discriminatory policies.47

Figure 6.3 below reports the changing steel export shares affected by all trade distortions worldwide and each class of discriminatory policy instrument that affected more than 10% of Global Forum steel exports in 2017. By 2017 the cumulative scale of beggar-thy-neighbour policies worldwide reached nearly 70% of Global Forum steel exports, nearly trebling in the years since 2009. Export incentives (typically in the form of tax-based export incentives) affected nearly three-fifths of Global Forum steel exports in 2017, making it by far the trade distortion with the biggest scale. That does not mean that the remaining trade distortions affect around 10% of the Global Forum’s steel trade as many bilateral trade flows are hit by multiple trade distortions in the steel sector. Indeed, if export incentives are dropped from

the calculation, then such is the spread of other trade distortions that 46% of Global Forum’s steel exports are still affected.

Much has been made in G20 statements about the role of subsidies as a distortion to steel markets. Figure 6.3 shows that by 2017 a third of Global Forum steel exports were sold into foreign markets where one or more local firms had received some type of (non-export-related) subsidy from the state. That subsidy can take many forms (cash grants, tax breaks etc) but this finding shows that the concerns raised about the prevalence of distortive subsidies in the steel sector have merit. Finally, given the prominence of US government procurement provisions favouring steel, it is interesting to note that 2017 over 10% of Global Forum steel exports were sold into national markets (not just the American market) where such discrimination exists.

To conclude, in terms of the likely scale of trade affected, domestic and export subsidies are by far the greatest policy concern. This is not to imply that other discriminatory policy interventions are irrelevant or unimportant or that there may be some markets in which policies other than subsidies significantly distort access. On the basis of the evidence presented here, there is a case for the G20 prioritising the winding down and removal of the various forms of subsidies that distort conditions of competition in the steel sector.


FIGURE 6.3International trade in steel products is most exposed to market distortions

created by domestic subsidies and export incentives

Note: where relevant, the letters before the policy instrument type in the legend of this figure refer to the relevant chapter of the UN MAST classification of non-tariff measures.Source: Global Trade Alert.

https://twitter.com/intent/tweet?text=pic.twitter.com/VFXMANuT4R




CHAPTER 7 ARE CHINESE STEELMAKERS DIFFERENT? EVIDENCE FROM CORPORATE ACCOUNTS

Anyone who has followed deliberations in the G20 and elsewhere about excess capacity in the steel sector will have noticed that Chinese state policy and steelmakers are singled out for criticism. This begs the question as to whether Chinese steel producers are really that different? If Chinese steelmakers are treated differently by their government then surely this manifests itself somehow in evidence on firm performance?

The purpose of this chapter is to use data from published corporate accounts of stock market listed Chinese and non-Chinese steelmakers to see if there are clear performance differences that may suggest differential policy treatment. Particular attention is given in the second section of this chapter to the state-provided financial support that Chinese and non-Chinese steelmakers have reported receiving.

In general, much more work needs to be done connecting the growing body of evidence of public policy intervention in the steel sector with the financial and other performance of steel firms. This chapter represents a start and certainly does not claim to be conclusive. Even so, the results reported below may help frame current and future discussions, in particular as to whether Chinese firms and state policy are really the bogey man they are made out to be.

Steelmakers’ relative financial performance and possible subsidy identificationBloomberg Professional, a service that provides access to the financial performance of many listed firms around the world, was consulted and 70 steelmakers whose stocks and shares trade publicly were identified. Of those 70 firms, sufficient information was available for 16 Chinese steelmakers and 31 non-Chinese steelmakers from 2008 to 2017. The sample of Chinese steelmakers is, it turns out, representative of the size distribution of steel firms in that country.

Reported financial data was used to calculate, for each steel producer in each year 2008 to 2017, four measures of profitability: gross profit margins, operating margins, pre-tax profit margins, and post-tax profit margins. Means and medians for each group (Chinese and non-Chinese) of steelmakers were calculated for each year and profit measure. Further investigation revealed that the mean profit margin calculations were skewed by the presence of a small number of very successful non-Chinese steel producers. For this reason, most of the analysis that follows refers to median profit margins.

Looking at the underlying annual data on the median post-tax profit margins of non-Chinese steel makers what is striking is just how low those margins were even before steel prices reached their nadir in late 2015 and how little margins contracted during the recent episode of low world steel prices. When gross margins, operating margins, or pre-tax profit margins are considered as well, the years 2014 and 2015 do not stand out as affecting the median performance of non-Chinese steel producers. On the basis of this finding one might be tempted to ask what the fuss was all about. However, just because the median is little changed does not rule out that individual non-Chinese firms were unaffected by falling world steel prices in the middle of this decade.

In contrast, on all four measures of median profit margins considered here, 2015 was a simply awful year for the Chinese steel sector. Median profit margins fell between 3% and 6.5% in that year compared to 2014. The median post-tax profit margin for the Chinese steel makers in our sample was -2.65%. Interestingly, those margins have all recovered sharply. By 2017 all four median profit margins had recovered 8-12 percentage points. In fact, the median post-tax profit margin for listed Chinese steelmakers exceeded that of non-Chinese steelmakers (6.3% versus 3.8%).


Figure 7.1 plots the differences in the median profit margins of Chinese and non-Chinese listed steelmakers in our sample. Once the global financial crisis hit, the difference between these medians rarely exceeded 2.5% (in either direction) suggesting that on average there is little difference in profitability between Chinese and non-Chinese steel producers.

Also, there is no clear pattern of which firms benefit from high or low world steel prices. Non-Chinese firms had higher median post-tax profit margins when steel prices were relatively high in 2011 and when steel prices reached their trough in 2015. Meanwhile, Chinese steel makers had higher post-tax profit margins in 2017.

Bearing in mind that Chinese steel exports fell in 2017, then the increase in profit margins must largely reflect developments in the Chinese market, which could include reductions in steel capacity that the Chinese government claims it has undertaken in recent years. In sum, the “punishment” Chinese steel firms faced for allegedly dumping their steel on world markets since 2014 has not translated into lower median profit margins.

There is one other implication of the pre-tax profit margins of the non-Chinese firms changing little during the recent episode of low world steel prices which does correspond to what was observed at the time. To the extent that the low world steel prices put downward pressure on the average price received for each ton of steel produced

by non-Chinese firms, then to maintain their pre-tax profit margins these firms would have been under huge pressure to cut costs. Options for doing so include laying off own staff and squeezing suppliers. Both outcomes generate headlines and contribute to the momentum to find a political or policy “solution” to the woes of the non-Chinese steel sector.

The differences between the four profit margin measures may reveal differences in the cost structure and tax treatment of Chinese versus non-Chinese steel producers—and potentially where Chinese firms might have benefited more from state support than foreign rivals.

Before discussing the empirical findings, one can reason as follows. If, as is often asserted, Chinese steel producers do not pay the full price for the energy they use then, other things being equal, this should result in higher gross profit margins than for non-Chinese rivals. Differences in rules for depreciation and allowances can generate differences in reported operating margins. When compared to non-Chinese rivals, if Chinese firms have access to finance or borrowing at artificially low rates of interest then this factor should make Chinese pre-tax profit margins larger. If profits are taxed differently then, again other things being equal, this could create differences in median post-tax profit margins between Chinese and non-Chinese steel makers. If any of these policy interventions favouring

FIGURE 7.1Median differences in profit margins have been small since the crisis hit

Source: See main text.

https://twitter.com/intent/tweet?text=pic.twitter.com/9AG63vBVY3




Chinese firms is longstanding then one might expect to see sustained differences in the relevant reported profit margins. If a policy intervention that favours Chinese firms is introduced at a certain point in time then one can look at the intertemporal variation in reported margins of Chinese and non-Chinese firms (the latter presumably not benefiting from the policy intervention) to see if there is any evidence of a significant change in financial performance.

Figure 7.2 plots the differences in all four median profit margins for the years 2008 to 2017 and several observations follow. First, foreign steel makers have larger gross profit margins than Chinese rivals. This is exactly the opposite of what one should see if Chinese steel plants have their energy costs subsidised. Put differently, if Chinese firms do receive state support with their energy costs then their effect must be swamped by other factors. Those factors could include lower levels of Chinese steel plant productivity and differences in the types of steel produced (with non-Chinese firms producing higher end, and therefore higher priced, steel.) Put yet another way, whatever reduction of gross profit margins was created by the latter two factors, any Chinese energy subsidies do not offset that disadvantage. This is not to imply that any Chinese energy subsidies are unimportant or non-distortionary but it does put the impact of any such subsidies in perspective.

Second, in Figure 7.2, the biggest contraction in differential profit margins occurs between gross margins and operating margins. This suggests that there could be differential treatment of depreciation and allowances in favour of Chinese firms, a matter that could be the subject of further investigation.

Third, the differences in median profit margins between operating and pre-tax profit margins are small. This casts doubt on the proposition that Chinese firms have access to unusually cheap credit as compared to foreign rivals. Given the widespread resort by central banks in Europe, North America, and Japan to quantitative easing during the past decade, foreign steelmakers may have had access to finance on cheap terms, too.

Fourth, that there is little difference over the years when moving from pre-tax and post-tax profit margins suggests little difference in the tax treatment of profits between Chinese steel producers and their rivals. Although, as noted earlier, the fact that pre-tax margins were so thin suggests there may not have been that many profits to tax in the first place.

Overall, then, two policy-relevant findings follow from this exploratory analysis. First, that it is worth exploring which Chinese policies, if any, narrow the gap between Chinese and non-Chinese operating margins. As indicated above, a good place to start would be the rules on

FIGURE 7.2Understanding the difference between Chinese and non-Chinese gross and operating margins is key


https://twitter.com/intent/tweet?text=pic.twitter.com/SsL2R9Em9F




depreciation and allowances. Second, given how low the pre-tax profit margins are for Chinese steel producers the impact of any subsidies or favourable treatment could well be keeping these publicly listed steel firms from making losses. Indeed, the amount of subsidy necessary to avoid such loss-making (as measured as a percentage of total revenue) could be very small.48 We now turn to the evidence on the prevalence and magnitude of such subsidies in the steel sectors in China and abroad.

Corporate reporting of state largesseNational and international accounting standards typically require publicly listed firms in China and elsewhere to report the total value of subsidies that they have received. These subsidies can be in many forms including cash grants, tax rebates and allowances, and deferred tax assets. Here we examine the data available on such subsidies reported by as many Chinese and non-Chinese steel firms as we could find.

From 2007 on, 30 or more Chinese listed steel producers reported subsidies, see Figure 7.3. The number doing so rises from 30 to 40 since the onset of the global economic crisis. In nominal terms, the total value of subsidies

48 The median pre-tax profit margin of Chinese steel making firms during the years 2008 to 2017 being 1.34%. The mean was 1.44%. The latter being inflated by the relatively high pre-tax profit margins in 2008 and 2017.

reported by these firms rose seven-fold from 2009 to 2015. In 2015 just under 7 billion yuan were paid as subsidies to Chinese steel producers, an amount approximately equal to one billion US dollars at the time. The total amount of subsidies reported for 2016 appears to have fallen by half from the peak in 2015. However, this may be a function of reporting lags (as not every reporting firm may have filed all of their quarterly reports). Or it could be that the Chinese government scaled back their subsidies after world steel prices began to recover.

Expressed as a percentage of total revenues, however, the reported levels of subsidies received by Chinese firms are small. In interpreting this finding, it is worth bearing in mind the following points. First, Chinese subsidies could have been paid to non-listed steel producers as well. Second, to the extent that the price paid by Chinese steel producers for key inputs were depressed by subsidies paid upstream, then they won’t be reported by downstream buyers. Third, there may be other forms of financial support that Chinese publicly listed firms do not report. If anything, then, the totals of Chinese subsidies found in the financial statements of publicly listed firms are likely to understate the scale of the policy intervention.

FIGURE 7.3Subsidies received by publicly listed Chinese steel producers rose sharply since 2008

Source: WIND, http://www.wind.com.cn/en/Default.html

http://www.wind.com.cn/en/Default.html

https://twitter.com/intent/tweet?text=pic.twitter.com/QZzJnQzAzd




FIGURE 7.4Reported Chinese subsidies never exceed 1% of total revenues of the recipient firms

Source: WIND, http://www.wind.com.cn/en/Default.html

FIGURE 7.5While the total amount of subsidies received by non-Chinese steel producers has fallen over time, two

steelmakers have received substantial amounts of state largesse when world steel prices were low


http://www.wind.com.cn/en/Default.html

https://twitter.com/intent/tweet?text=http://pic.twitter.com/cwN2tEeoks



https://twitter.com/intent/tweet?text=pic.twitter.com/2mgbPNp1GR




From the Bloomberg database we were able to find reports of different subsidies and state financial support received by 15 non-Chinese steel producers.49 From 2008 to 2017 the total amount of subsidies received by these rivals to Chinese steel producers fell from just under two billion US dollars to 1.2 billion US dollars, see Figure 7.5. The share of direct government grants in total subsidies received has increased over time to nearly 40%, the rest being a variety of tax credits and tax deferred assets (typically for prior losses).

During the recent episode of low world steel prices, however, two non-Chinese steel producers stand out in terms of receiving significant state largesse. One is the Steel Authority of India, a state-owned company, which received in total over three-quarters of a billion dollars in tax-based subsidies, including export-related tax-based subsidies, in 2015 and 2016. This finding may account in part for the less than full support given by the Indian government minister that spoke at the Global Forum and whose remarks were reproduced in an earlier chapter.

49 Specifically, we found information on a range of subsidies reported by Arcelor Mittal, POSCO, TATA steel, US Steel, Nucor, Gerdau, Severstal, NLMK, Steel Authority of India, Thyssen Krupp, Magnitogorsk Iron & Steel, JSW steel, Techint Group (only steel operations), SSAB and Erdemir Group.

50 See, for example, the support outlined in this UK government statement of 21 April 2016 https://www.gov.uk/government/news/government-outlines-details-of-financial-support-for-tata-steel-uk-buyers.

The second company is the global steel producer, Tata Steel, which has received over a billion dollars of government grants during the three years 2014 to 2016. A significant share of those grants are likely to have come from state bodies in the United Kingdom where Tata Steel’s subsidiary ran into substantial financial difficulties.50

Overall, Chinese firms are not the only steel producers to receive state support, which can come in many forms. On the face of it the magnitude of the subsidies reported by publicly listed firms is small, in particular when compared to their total revenues. However, given that the pre-tax profit margins of many steel producers—Chinese or otherwise—are tiny or negative, any state financial support does not have to be that large to stem the red ink (of losses.) An important caveat to these findings is that there are good reasons to believe that the total amount of subsidies reported by publicly listed steel companies understates the total amount of state financial support afforded to the entire steel sector, which includes non-listed firms as well.

https://www.gov.uk/government/news/government-outlines-details-of-financial-support-for-tata-steel-uk-buyers

https://www.gov.uk/government/news/government-outlines-details-of-financial-support-for-tata-steel-uk-buyers


CHAPTER 8 WHAT IS EXCESS CAPACITY? CAN IT BE ACCURATELY MEASURED?

51 Indeed, the report of the Global Forum refers to setting targets on page 8: “Setting targets for reducing crude steel capacity can be an effective element of a national framework for reducing excess capacity.” Presumably, there need to be empirical counterparts to the concept of excess capacity otherwise it is hard to make sense of recommendations such as this, found on page 44 of the Global Forum report: “Wherever excess capacity exists, governments have a role in advancing policies that facilitate the restructuring of the steel industry while minimizing the social costs to workers and communities” (Global Forum 2017). How can one know if excess capacity exists without some means of measuring it?

Trade policy discussions are replete with phrases that are seemingly obvious but which, upon reflection, have little substantive content. The phrases “fair trade” and “unfair trade” come to mind. In recent years the phrase excess capacity has been used widely and has secured its place in the G20 lexicon. The purpose of this chapter is to put the concept of excess capacity under the microscope.

At first it may seem rather academic discussing what the term excess capacity means. However, if the reduction in excess capacity is the objective of G20 action in the steel sector then, for this concept to be operational, policymakers will need to relate it to reliable, measurable counterparts.51 So knowing what excess capacity is is important. Indeed, one way of framing the question is to ask whether excess capacity provides a sensible basis upon which to conduct trade diplomacy in the steel sector or is it another one of those slippery terms in the trade policy nomenclature?

Different meanings for the phrase excess capacityIn the report of the Global Forum and in G20 declarations the term excess capacity appears to be a property of a sector of economic activity, such as the steel sector. Although no specific definition is given for the term excess capacity in Global Forum (2017), paragraphs 13 and 14 of that document imply that it is measured as the difference between the total global production capacity of steel and the total demand for steel expressed in millions of metric tonnes. While the concept of total demand at prevailing prices has a clear counterpart in economic theory, the concept of production capacity is not so clear. Does it relate to the maximum feasible production capacity (irrespective of the cost of production) or some other production level?

Worse, when one turns to the economic literature on excess capacity, it is defined as a property of a firm, not a sector. In 1993, the OECD published a Glossary of Industrial Organisation Economics and Competition Law that included the following standard definition of excess capacity:

“A situation where a firm is producing at a lower scale of output than it has been designed for. It exists when marginal cost is less than average cost and it is still possible to decrease average (unit) cost by producing more goods and services. Excess capacity may be measured as the increase in the current level of output that is required to reduce unit costs of production to a minimum.”

It is worth reflecting on this definition. This definition has an empirical counterpart which is stated in the quotation above. Only the range of output between the current level and the production level associated with minimum average unit costs counts as excess capacity, not the difference between the current level and the maximum possible level of production (which, by definition, must exceed or equal the production level associated by the minimum level of average unit costs.) The maximum level of production is sometimes referred to as full capacity.

The challenge in defining an excess capacity reduction target that corresponds to the economic definition is that the production level associated with minimum average unit costs may not be observed. Substituting that production level with the full capacity level will exaggerate the level of excess capacity, potentially misleading policymakers. In addition, calculating utilisation rates with the full capacity level of output will result in rates lower than they should be.

Furthermore, OECD (1993) notes that “excess capacity is a characteristic of natural monopoly or monopolistic competition.” As is well known in microeconomics, this is because a profit maximising firm in these market structures may choose an output level that is less than


the output level associated with minimising average total costs of production. In such cases, excess capacity is a natural state of affairs and, therefore, not a “problem” to be solved by policy intervention. Put differently, firms can choose to utilise less than 100% of their “capacity”. Only in perfectly competitive markets in the long run do the surviving firms produce at output levels that eliminate excess capacity.52

Moving from the firm level to the sectoral or industry level is not so straightforward either. Which firms are to be included in the same industry? Firms supplying one type of steel may compete for different customers than suppliers of another type of steel. It does not make sense to include them in the same excess capacity calculation, however excess capacity is defined. Doing so may give the impression that all forms of steel production face excess capacity, whereas the reality may be that this conclusion properly applies to certain types of steel production.

There are good reasons then why analysts grounded in microeconomics would look sceptically upon the Global Forum’s measurement of excess capacity. Now we turn to the difficulties in accurately measuring key variables and our doubts are compounded.

Operationalising excess capacity faces measurement concernsThe Global Forum measures global excess capacity in the steel sector as the difference between crude steelmaking capacity and the total demand for steel. Data on the latter is provided by the World Steel Association (WSA). Apart from 2013, where the WSA claimed Chinese demand for steel was 735 million metric tonnes and the Chinese Ministry of Industry and Information Technology (MIIT) reported 710 million metric tonnes, there are no big differences in steel demand figures used in different reports on this sector.

The difficulties arise in the estimates for crude steelmaking capacity. The Global Forum report uses data submitted by member governments for the years 2014-2016. These differ from the statistics presented by the OECD Steel Committee on crude steel capacity for the years 2014-2016, which are based on underlying WSA data. In 2016, the Global Forum estimates that the crude steelmaking capacity of its members to be 2,031.4 million metric tonnes. Whereas for the same countries the OECD total is 2,133.3 million metric tonnes. The difference being over 101 million metric tonnes. The biggest discrepancy relates

52 We were unable to find any authors or organisations claiming the steel sector meets the textbook conditions for perfect competition.

53 See https://www.commerce.gov/news/press-releases/2018/02/secretary-ross-releases-steel-and-aluminum-232-reports-coordination

54 Not the production capacity of the Global Forum members. Therefore, the headline reported estimate of excess capacity relates to all nations not just the Global Forum members.

to the estimate of China’s crude production capacity where the OECD figure exceeds that stated in the Global Forum report by over 91 million metric tonnes.

If the success of the Global Forum rises and falls on reducing excess steel capacity, measurement discrepancies of this magnitude call into question whether capacity reduction metrics can provide a reliable guide to policymakers and third parties.

An 80% target capacity utilisation rate?Just as the Global Forum report does not take a stand on the target level of global excess capacity in the steel sector, it is silent on what the target capacity utilisation rate is. In one part of the report a distinction is made between capacity utilisation rates above and below 80% (Global Forum 2017). However, it would seem that major trading powers do have a target utilisation rate in mind. A statement by the US Secretary of Commerce on 16 February 2018, mentions an 80% rate as being “the minimum rate needed for the long-term viability of the industry.”53 Lu (2017)’s policy analysis of Chinese steel sector development for the Peterson Institute in January 2017 referred to an 80% utilisation rate as implied by the targets set by China’s MIIT.

Leaving aside whether it makes sense to have a single capacity utilisation target for a sector that produces such heterogenous products, the question arises as to whether any choice of target is arbitrary. Why 80%? Why not 85% or 75%? What objectives underlie those targets? Are the underlying objectives of different governments (for example, profitability or rates of return) consistent with one another? Setting a target utilisation rate based on levels thought likely to deliver certain levels of profitability is likely to be confounded by demand and cost shocks in the interim that will alter the levels of excess capacity that profit-maximising firms will choose in the first place.

Furthermore, allowing for a target utilisation rate below 100% has a sizeable impact on the “headline” numbers for global excess steel capacity. In footnote two of Global Forum (2017), it is reported that global54 steel production capacity in 2016 was 2,369.5 million metric tonnes and that global demand for steel in the same year was forecast to be 1,633.0 million metric tonnes. This created the Global Forum’s headline estimate of global excess steel capacity of 736.5 million metric tonnes (rounded up to 737 million metric tonnes in the main text of the report.) With an 80% utilisation rate target, the new estimate for global excess capacity would fall to 262.4 million metric tonnes, a 64%

https://www.commerce.gov/news/press-releases/2018/02/secretary-ross-releases-steel-and-aluminum-232-


reduction in the headline number. Even 262.4 million metric tonnes may sound like a lot but bear in mind that between 2014 and 2016, China, the European Union, and Japan reduced their crude steel making capacity by 70 million metric tonnes. Of course, any mismeasurement of crude production capacity (like that mentioned in the last section) could further reduce the actual amount of global excess capacity.

In sum, once definitional, measurement, and target-setting concerns are taken on board there are serious concerns that the concept of excess capacity can be operationalised rationally and objectively, and so provide a basis for meaningful collective action by the G20 and the Global Forum. In turn this begs a further question: if not the level of global excess capacity or a target global steel sector utilisation rate, what is the observable metric that, if reached, would constitute success for this form of

international collective action? Like the notion of unfair trade, as applied by the Global Forum there is much less to the notion of excess capacity than meets the eye.

ReferencesGlobal Forum (2017). Global Forum on Steel Excess Capacity. Report. 30 November 2017. Available at ht tps : / /www.bmwi .de/Redakt ion/EN/Downloads/global-forum-on-steel-excess-capacity-report.pdf?__blob=publicationFile&v=1

OECD (1993). Glossary of Industrial Organisation Economics and Competition Law. Paris.

Lu (2017). Zhiyao Lu. “China’s Excess Capacity in Steel: A Fresh Look.” China Economic Watch. Peterson Institute of International Economics. 29 June. Available at https://piie.com/blogs/china-economic-watch/chinas-excess-capacity-steel-fresh-look

https://piie.com/blogs/china-economic-watch/chinas-excess-capacity-steel-fresh-look




CHAPTER 9 WHEN IS EXCESS CAPACITY A SYSTEMIC TRADE CONCERN?

55 Of course, under these circumstances it is easy to see why policymakers in the nation with excess capacity might be worried about the adverse effects.

Tackling excess capacity in the global economy is being used more and more to frame deliberations on trade policy in fora such as the G20, the OECD, and the WTO. To determine whether this framing makes sense or whether it is a fad, it is important to understand why current levels of excess capacity in the global economy are a systemic concern. What are the mechanisms involved? To the extent that those mechanisms reveal causal statements then it may be possible to assess them empirically as well, further informing policy formation. The purpose of this chapter is to answer the former question. The purpose of the next chapter is to assess the latter.

Had we had to rely on the Global Forum’s November 2017 report, not much progress would have been made. Despite mentioning the phrase “excess capacity” 132 times, on not one occasion were readers given a clear statement about the mechanism by which excess capacity has knock-on effects through cross-border trade. For sure there are plenty of assertions about the effects of excess capacity and occasionally assertions of cross-border spillovers as the following two statements make clear:

“By promoting new investment and maintaining marginal mills, subsidies and government support measures contribute to excess capacity in the steel sector and cause market distortions affecting steel production, prices and trade. This shifts the burden of excess capacity adjustment to other countries.” (Global Forum 2017, pages 8-9)

“The persistence of excess capacity poses significant challenges to the industry’s profitability and long-term viability, while also exacerbating trade tensions.” (Global Forum 2017, page 9)

Perhaps Global Forum members regard it as obvious that excess capacity creates negative knock-on effects for trading partners. But their lack of evidence demonstrating such knock-on effects raises suspicions—could excess capacity become the next pretext for protectionism? A

complete argument about the systemic threat posed by excess capacity is not presented in the Global Forum’s report.

At this stage it is important to explain why cross-border knock-on or spillover effects are a necessary condition for excess capacity to be a systemic threat to global prosperity or to global trade. If inappropriate government policy in a nation results in excess capacity that does not affect directly or indirectly trade or investment flows into or out of that nation, then the resulting distortion of resources is contained within that nation. Under these circumstances it difficult to see what is at stake for the nation’s trading partners and why the matter should be considered in global fora, such as the G20 and WTO.55

Fortunately, some pointers as to the nature of cross-border spillovers created by excess capacity do exist in submissions to the WTO by certain member governments. Such statements allow hypotheses to be formulated as to the potential impact of global excess capacity, some of which may be testable. For example, on 12 October 2016 the European Union, Japan, Mexico, and the United States circulated a joint statement at the WTO’s Committee on Subsidies and Countervailing Measures in which several claims were made:

“Industrial overcapacity has become a major problem for the global economy. It negatively affects:

• the economic situation of those countries in which overcapacity in certain industrial sectors occurs,

• the economic situation of third countries, whose industries are adversely affected by the resulting oversupply.

In this sense, overcapacity is a major cause of distortions to international trade and creates multiple negative externalities by stymying the development and growth of nascent industries in other countries and/or leading to a decline of industrial activity where it already exists. In so doing, it has societal consequences which are a contributing factor to negative sentiment regarding


international trade. While some of the related policies may have been introduced by governments with a view to fostering such industrialisation and development, as well as safeguarding jobs, the longer-term effect is often lose-lose for both the source country as well as its trading partners as prices decline, production becomes uncompetitive and governments are faced with decisions in the context of possible social unrest and ever-strained budgets. This is a problem in a number of industrial sectors, including among others the steel and aluminium sectors.” (WTO document G/SCM/W/569)

While this statement does a good job of laying out the different adverse effects, the relevant mechanisms are still not made explicit. Another step forward came in the following joint statement by Canada, the European Union, Japan, and the United States on 24 April 2017 to the Committee on Subsidies and Countervailing Measures at the WTO:

“The use of subsidies to create and maintain excess capacity, without sufficient attention to the forces of supply and demand, often leads to increased exports in times of domestic economic downturns. While some of the subsidies employed may be prohibited under Article 3 of the Agreement on Subsidies and Countervailing Measures (SCM Agreement), many are not. Given the highly distortive nature of these subsidies and the often-resulting spill-over of excess production onto export markets, the effects on trade of these subsidies often can be the same as – if not worse than – export subsidies. Therefore, these types of subsidies rightly should be considered for more stringent disciplines. This conclusion is all the more true in the current situation of the world economy in which several sectors suffer from severe excess capacity. Market forces normally would ensure that the least efficient producers in these sectors exit the market, thereby rebalancing demand and supply and eliminating overcapacity. Government financial and other support, however, keep ailing and non-economically viable companies afloat and prevent market forces from achieving the appropriate outcome.”

This statement contains a testable causal argument linking subsidies and state financial support to demand conditions and exports. Furthermore, another causal claim is made about subsidies to least productive firms resulting in less exit than otherwise.

It is possible, however, to develop a more elaborate theory of harm. After all, if domestic subsidies result in higher levels of exports (“flooding goods on to the world markets when demand levels are home are unusually low”) then one should expect excess capacity in a nation to, other things being equal, increase the number of import surges into trading partners. To the extent that the products in

question are standardised or even homogenous then such export increases could, other things being equal, reduce world prices.

A second round of policy changes may be induced in trading nations in response to import surges or falling world prices for goods in excess capacity sectors. These policy responses could include antidumping actions, countervailing duty actions, other non-tariff measures, and state financial support to affected local firms. To the extent that trade barriers erected deflect the import surges to other nations, then a third round of policy changes can be induced by excess capacity. In this manner, then, one can envisage adverse systemic consequences arising.

Even in the absence of an export increase out of the nation with excess capacity, a fall in domestic demand coupled by state financial support could lower prices in that nation, resulting in lower imports from trading partners and lower returns on foreign subsidiaries operating in the nation with excess capacity. Therefore, there can be import-related and foreign direct investment-related consequences as well.

There may well be consequences of excess capacity in trading partners for the level of public support for open borders at home, especially if jobs are lost and firms close down due to the resultant import surges or world price falls. Should excess capacity be linked in the national political debate to state action in the trading partners responsible that breaks regional or multilateral trade rules, then the perception that other nations are “cheating” could be used to justify retaliation, protectionism at home, and resistance to signing new trade agreements. If such dynamics develop in multiple nations, it could have systemic consequences.

To the extent that excess capacity in some nations induces through the export channel other nations to offer financial support to firms facing tougher import competition, then resort to potentially illegal subsidies may spread. The desire to hide such subsidies may, in turn, make governments even more reluctant to notify accurately their state financial support to the WTO. This would then weaken one mechanism that makes the world trading system more transparent.

In addition to developing causal links relating the factors (both government and other) that create excess capacity and the links between such excess capacity and the economic wellbeing of trading partners, it is important to assess the scale of the problem. After all, senior policymakers at the G20 should not focus on second or third-order challenges.

Consequently, looking beyond the steel sector, it is important to answer questions of the following type. Just how many sectors face excess capacity, however


defined or identified? How much of global trade is in those sectors? How many people are directly or indirectly employed in those sectors? In these sectors, how often do import surges occur and how much trade is involved? Do these sectors exhibit an unusually high level of state intervention? If so, of what type and how costly, both in absolute terms and relative to other sectors?

The answers to these questions will reveal whether the cross-border spillovers of excess capacity sectors are indeed a systemic threat. To date, since answers to these types of questions haven’t been provided, assertion has tended to get far ahead of the underlying evidence base.


CHAPTER 10 IS CHINESE EXCESS CAPACITY A SYSTEMIC TRADE CONCERN?

56 Throughout this chapter we refer to sectors with excess capacity and overcapacity synonymously.

57 Available in Chinese at http://www.gov.cn/zwgk/2013-10/15/content_2507143.htm

Some officials and policymakers have asserted that excess capacity is a problem that goes beyond the steel sector, with the implication that it merits a systemic trade policy response. In this chapter we examine the characteristics of sectors where the Chinese economy is thought to have overcapacity and consider whether the associated patterns of policy intervention and trade differ from what might be referred to as normal sectors (sectors without Chinese excess capacity). Our goal is to take what to date has tended to be a qualitative debate and add empirical substance.

Identification of sectors with Chinese excess capacityThe first step, however, is to define which Chinese sectors are taken to have excess capacity.56 Our reading of the policy literature shows that this is a contested matter. As a result, we provide a narrow and a broad definition of the set of Chinese sectors with excess capacity, the former being a subset of the latter.

For the narrow definition we take the manufacturing sectors identified by the Chinese government in the “Guiding Opinion on Eliminating Severe Excess Capacities” issued on 6 October 2013.57 We matched the sectors mentioned in that official document to seven sectors in the United Nations CPC classification of sectoral economic activity (see Table 10.1).

TABLE 10.1Identification of sectors where China is thought to have excess capacity

CPC code Full name of CPC sector Narrow definition Broad definition

331 Coke & semi-coke of coal, of lignite or of peat; retort carbon √ √

371 Glass & glass products √ √

374 Plaster, lime & cement √ √

411 Basic iron & steel √ √

412 Products of iron or steel √ √

414 Copper, nickel, aluminium, alumina, lead, zinc & tin, unwrought √ √

493 Ships √ √

019 Forage; natural rubber; living plants; raw vegetable materials √

291 Tanned or dressed leather; composition leather √

292 Luggage & handbags; saddlery & harness; other leather articles √

293 Footwear other than sports footwear √

321 Pulp, paper & paperboard √

341 Basic organic chemicals √

342 Basic inorganic chemicals n.e.c. √

343 Tanning or dyeing extracts; tannins; colouring matter n.e.c. √

355 Man-made fibres √

373 Refractory products & structural non-refractory clay products √

464 Accumulators, primary cells & primary batteries; parts √

471 Electronic valves & tubes; electronic components; parts √

Sources: See main text.

http://www.gov.cn/zwgk/2013-10/15/content_2507143.htm


To assemble a broader definition, we consulted a report on this matter by the U.S.-China Economic and National Security Review Commission, a body set up by the US Congress that is routinely critical of Chinese economic policy, which contained a list of Chinese manufacturing sectors with overcapacity (USCC 2014 page 105). We also consulted Fan (2016), which cites a 2014 circular of the Chinese Ministry of Industry and Information Technology that lists 15 manufacturing sectors with excess capacity. Our broad definition of the Chinese sectors facing excess capacity includes the seven sectors mentioned in our narrow definition plus those mentioned in the two sources mentioned directly above (see also Table 10.1).

It will be interesting to see if the sectors falling under the narrow definition have different characteristics from those falling under the broader definition. If so, for the

58 The last year for which a full set of UN trade data is available.

purpose of analysis, policy deliberation, and response it may not make sense to treat all excess capacity sectors

the same.

Share of world and Chinese goods trade in Chinese excess capacity sectorsTo shed light on the scale of goods trade in sectors where China has excess capacity, using disaggregated trade data (at the 6 digit-level of the HS classification) we calculated for each year from 2005 to 201658 the shares of world imports in sectors falling into the narrow and broad definitions of Chinese excess capacity. The results are plotted in Figure 10.1.

FIGURE 10.1Since 2005 no more than 21% of world trade was in sectors where China has excess capacity

https://twitter.com/intent/tweet?text=pic.twitter.com/4J08TFiRBq




On the broad sectoral definition, the percentage of world goods trade that is in sectors where China is thought to have excess capacity never exceeded 21%. That percentage has fallen since 2011 and in 2016 accounted for 18% of world goods trade. For the goods trade of the G20 nations in only one year (2008) does that percentage just exceed 20%.59 In no year since the onset of the global economic crisis was more than a fifth of G20 goods trade in sectors where China has excess capacity. This does not imply that excess capacity sectors are unimportant, but it highlights that four-fifths of G20 goods trade is in sectors where even China’s critics do not contend there is excess capacity. This is the first piece of evidence in this chapter that questions the wisdom of putting (Chinese) excess capacity at the centre of any G20 trade work programme.

Of course, the percentage of world goods trade where the narrow definition of Chinese sectors with excess capacity applies is smaller. In fact, it never exceeded 8% of world goods trade or G20 goods trade from 2005 to 2016.

Given our argument, that from a trade policy and international collective action perspective, it is the cross-border spillovers from Chinese excess capacity that matter, we also calculated for each year 2005 to 2016 the percentage of Chinese goods exports implicated. This too is shown in Figure 10.1 and the results may surprise some readers. On the broad definition of sectors with Chinese excess capacity, the percentage of Chinese goods exports in those sectors never exceeded 18%, peaked in 2008, and has declined to 15.8% in 2016. In short, at most one-sixth of Chinese exports are in sectors where excess capacity is present. Therefore, those policymakers, analysts, and societal interests worried about an across-the-board Chinese export juggernaut will not find it that useful to focus on sectors where China is thought to have excess capacity. Indeed, in 2016 only 14% of Chinese exports to the G20 nations were in sectors in the broad definition of those with excess capacity.60

Sectors with Chinese excess capacity witness more policy interventionNext, we examined whether resort to liberalising and protectionist policy intervention was more frequent in sectors with excess capacity. Recall that, on the broad definition, approximately a fifth of world goods trade is in sectors with Chinese excess capacity. As the left-hand panel of Figure 10.2 shows, whether one considers traditional import barriers (such as tariffs, antidumping, anti-subsidy, and safeguard actions) or the full range of import-related barriers, the sectors in which China is thought to have excess capacity are over-represented. In no year from 2009 to 2018 do these sectors account for less than 35% of import barriers applied worldwide.

59 As this statistic is not in Figure 10.1, it is available upon request.

60 As this statistic is not in Figure 10.1, it is available upon request.

When one considers state-provided financial support (both export-related and non-export related) the findings are different, however. On the broad definition, the sectors with Chinese excess capacity account for only a slightly larger share of subsidies granted worldwide than they account for world trade. On the narrow definition, the sectors with Chinese excess capacity account for twice as large as share of subsidies granted worldwide than their share of world trade might suggest. The impression—which given the statements on excess capacity appears to be widely held in the official community—linking excess capacity to substantial resort to subsidisation is probably best confined to the seven sectors associated with the narrow definition.

It may also surprise some to learn that the proportion of liberalising public policy intervention is much higher in sectors where there is thought to be Chinese excess capacity. On the broad definition, for the years 2009 to 2018 between 27.5% and 35.5% of all liberalisation steps worldwide took place in sectors where China had excess capacity. On the narrow definition since 2009 the proportion of liberalisation worldwide taking place in sectors with Chinese excess capacity is three to four times their share of world trade.

In light of these findings it is misleading to associate sectors with Chinese excess capacity solely with trade distortions. Moreover, not every sector where there is thought to be excess capacity in China has an unusually large share of subsidy intervention.

A more fine-grained breakdown of the resort to discriminatory or protectionist policy intervention is provided in sectors with excess capacity and those without is provided in Figure 10.3. This breakdown makes use of the United Nations MAST classification on non-tariff measures and adds data on import tariff increases and government measures affecting the access or treatment of foreign investors. The data refer to protectionist policy interventions implemented since the first G20 Leaders summit in November 2008.

Of the discriminatory interventions employed 400 times or more worldwide, the sectors with Chinese excess capacity account for far larger shares of contingent protection measures (the MAST terminology for safeguard actions and trade remedy actions), import tariff increases, non-export-related subsidies, and government procurement measures applied worldwide than their share of world trade would suggest. The seven sectors on the narrow definition account for disproportionately large shares of all five of the most frequently used forms of discrimination worldwide than their share of world trade would suggest.


FIGURE 10.2A disproportionate amount of trade-related policy intervention takes place in sectors with Chinese excess capacity

Broad definition

Narrow definition

https://twitter.com/intent/tweet?text=http://pic.twitter.com/hok1WYsxn9



https://twitter.com/intent/tweet?text=pic.twitter.com/ZIX4LJqO0f




Trade in some excess capacity sectors exhibit more births and deathsThe implication of some writing on excess capacity is that such capacity is responsible for more trade frictions because cross-border trade in these sectors is more volatile. Two empirical counterparts to this observation relate to whether, from the perspective of disaggregated bilateral trade data, there are more “births” and “deaths” of trade in sectors with excess capacity.

In what follows we take a birth of a bilateral trade flow to refer to the situation when there was no observed export of a particular product from one country to another in a given year and in the following year more than one million US dollars of exports of the same product are observed between the same trading partners. A death is said to occur when exports of a given product from one nation to another fall from an amount greater than one million dollars to zero in the following year.

Using worldwide bilateral trade data for the products in excess capacity sectors and other sectors from 2006 to 2016 we computed the share of all possible bilateral trade pairs where such a birth or death occurred. The findings are plotted in Figure 10.4. The shares of deaths rose sharply in 2009 when world trade contracted, and the shares of births rose markedly as world trade bounced back in 2010.

Since 2010 the share of births in sectors without excess capacity has tended to fall and the share of deaths has risen. The pattern followed by excess capacity sectors using the broad definition is similar (see Figure 10.4). Where there is a difference is the pattern of births and deaths in the seven sectors associated with the narrow definition of excess capacity—here the proportion of births and deaths were higher, indicating a pattern of

FIGURE 10.3Worldwide resort to protectionism differs across sectors with excess capacity

Note: The share attributed to the excess capacity sectors on the broad definition is net of the share associated with the excess capacity sectors narrowly defined. Therefore, to the sum of the two blue segments in any row reveals the share of instruments implemented in the excess capacity sectors broadly defined.

https://twitter.com/intent/tweet?text=pic.twitter.com/iNVWQUDL8i




greater trade disruption. Such rates of disruption existed before the global economic crisis hit and so it is not a phenomenon of recent years.

Most import surges in the G20 take place in sectors where China does not have excess capacityTo examine further the potential cross-border knock-on effects of sectors where China has excess capacity, we examined the frequency of import surges into the G20 nations from 2006 to 2016. We are interested in whether sectors where China has excess capacity generate import surges that account for a large share of G20 imports or a large share of the import surges witnessed by the G20 in a given year.

To do so requires an empirically implementable definition of an import surge. As we have explained elsewhere (Evenett and Fritz 2018), consider a cost reduction (ideally an incremental cost fall) experienced by exporting firms in a given nation. That cost reduction may be due to benign

reasons (for example, productivity improvements) or due to distortionary policy (state-provided financial support.) This cost reduction can result in higher levels of shipments to foreign markets if prices charged to foreign customers fall. That price reduction will also shift imports into those foreign markets away from suppliers in other nations. This cost-driven dynamic, then, creates two observable phenomena: an increase in the share of imports sourced by a trading partner from the exporting nation whose costs have fallen and a reduction in the total value of trading partner’s purchases from other foreign suppliers.

Using this logic, Evenett and Fritz (2018) defined an import surge as being one where the import share from one (or more) foreign source rose by at least 5% in the year in question and the total value of imports from all other (‘non-surging’) sources fell in the year in question. In our earlier study we applied this definition to study import surges into the United States. Here we apply the same definition to study import surges into each G20 member

FIGURE 10.4Relatively more births and deaths occur in the seven sectors that are part of the

narrow definition of Chinese economic activities with excess capacity

https://twitter.com/intent/tweet?text=pic.twitter.com/t67CkNeb31




from 2006 to 2016. Moreover, we examined whether the propensity for import surges differed between sectors with and without excess capacity.

Figure 10.5 summarises our findings as to the share of total G20 imports each year associated with import surges in sectors where Chinese excess capacity is not thought to be a concern and where it is (again using the broad and narrow definitions). In no year between 2006 and 2016, that is before and during the crisis era, was more than 2% of G20 imports involved in import surges where Chinese excess capacity was a concern. Furthermore, there is no perceptible increase over time in import surges from sectors with Chinese excess capacity, as measured as a share of total G20 imports. In contrast, the share of G20 imports associated with sectors where Chinese excess capacity is not thought to be a problem is higher and has been rising since 2011. Even so the latter share was less than 4% in 2016. Overall, Figure 10.5 shows that import surges into the G20 are rare.

If one focuses on the amount of trade associated with import surges into the G20 and identifies in which sectors those surges take place then, as Figure 10.6 shows, most surges occur in sectors where China is not thought to have excess capacity. Having made this point, in 2012, on the broad definition of sectors with Chinese excess capacity,

the 19 sectors concerned witnessed import surges that accounted for 40% of the total amount of G20 imports associated with import surges worldwide.

That percentage has fallen considerably since 2012 suggesting that the contribution of excess capacity sectors to import surges into the G20 has been diminishing just as G20 policymaker interest in the trade consequences of excess capacity has been rising! Interestingly, given the relatively stable import share associated with surges in the seven sectors in the narrow definition, the falling percentage mentioned just before must be due to smaller or less frequent import surges arising in the other 12 sectors where China is thought to have excess capacity. Again, it may not make sense to lump all of the excess capacity sectors together. Moreover, if import surges are a trade policy problem then confining interest to the sectors where China is thought to have excess capacity does not make much sense.

The top 5 sources of import surges into the G20Since, at this time, China is so closely associated with excess manufacturing capacity, it is worth asking whether China is a major source of import surges into the G20. In Figure 10.7 we identify the nations responsible for the highest shares of import surges into the G20 in each year

FIGURE 10.5Import surges in sectors where China has excess capacity do not account for more than 2% of G20 imports

https://twitter.com/intent/tweet?text=pic.twitter.com/LLw9zRVBAB




FIGURE 10.6At least 60% of the value of import surges into the G20 come from sectors where China is not thought to have excess capacity

FIGURE 10.7China is responsible for a much smaller share of import surges into excess

capacity sectors than in sectors without Chinese excess capacity

https://twitter.com/intent/tweet?text=pic.twitter.com/UgtoyB2H9B



https://twitter.com/intent/tweet?text=pic.twitter.com/H0p5iI7W1q




from 2006 and 2016 and we differentiate between sectors where there is and is not thought to be Chinese excess capacity.

China is consistently among the top 5 sources of import surges into the G20 whether or not the sectors in question are ones where the Chinese have excess capacity. However, the share of G20 import surges that China is responsible for is much larger in the sectors where China is not thought to have excess capacity than when it is. This is difficult to reconcile with the proposition that Chinese excess capacity tends to result in more import surges in trading partners. If anything, the presence of excess capacity in China is associated with China being responsible for a smaller share of G20 import surges. This finding is consistent across all years 2006 to 2016, suggesting recent years are no different from earlier times.

One reaction to the findings in Figure 10.7 is that the Chinese share of G20 import surges in sectors with excess capacity is lower because of extensive trade remedy and safeguard actions taken by other G20 nations against Chinese exports. To evaluate this contention we repeated this analysis for every product China exported to G20 destinations where Chinese exports have not been blocked by contingent protection. The earlier finding stands—China accounts for a much larger share of G20 import surges in sectors where China is not thought to have a problem with excess capacity.

Another interesting finding in Figure 10.7 is that Japan and the United States account for non-trivial shares of the import surges witnessed in G20 nations in sectors where China is thought to have excess capacity. Indeed, Figure 10.7 serves as a reminder that China is not the only source in the world of import surges and associated threats to employment and firm survival.

How often do G20 governments respond to import surges in sectors with excess capacity?If excess capacity does lead to cross-border harm in the form of import surges, then what does the data on G20 policy choice reveal about the propensity to discriminate in response? This question is worth asking for two reasons. First, G20 trade officials may say they are vexed by excess capacity in manufacturing sectors but what does the past behaviour of their governments reveal about the willingness to act against import surges in sectors with excess capacity compared to sectors without?

61 The mean values are larger than the medians suggested that the former is skewed upwards by some very large import surges.

62 So as to not skew the results in the statistics reported here we included responses by governments that covered the products in the import surge and other products. Sometimes governments respond to an import surge in a given product by taking a surgical action that targets only imports of that product. Governments may, however, roll their response to an import surge into another government measure, such as the national budget. Our analysis takes account of that possibility as well.

Second, a lot of energy appears to have been spent by officials from certain G20 countries defending their “right” to take action—often in the form of contingent protection measures—against trade disruption in sectors with excess capacity. But how frequently do they make use of these cherished trade policy tools when dealing with import surges?

To examine this matter, we identified each import surge into G20 nations from 2006 to 2016 and the products associated with each surge. Of the 5507 distinct import surges that we identified, 4405 lasted one year, 803 lasted two years and the remainder three years or more. The US dollar value of the imports affected per year rises on average with surge duration up to six years (where the median import surge involves shipments of $434 million) and then falls.61

Using the Global Trade Alert database, we then examined whether, for a six-digit product category where there was an import surge into a given country in a given year, the government of the importing nation reacted by taking action that discriminated in favour of local import-competing firms that manufacture the same product.

In particular, we examined whether the government in the nation experiencing the import surge reacted by raising import tariffs or implementing contingent protection (the so-called traditional trade barriers in the table), by imposing any import restriction to the likely benefit of domestic rivals or by offering domestic subsidies or export incentives. We calculated the percentage of all G20 import surges that resulted in such policy interventions in the same product lines62, taking account of differences in the duration of the import surge and the size of the import surge.

In interpreting the data recall that 94% of import surges lasted two years or less. For import surges of one year’s duration, only when the import surge is larger than one billion US dollars does the response percentage for raising import barriers exceed 5% (see Table 10.2). With import surges involving less than one billion US dollars, G20 governments react by raising import barriers less than 4% of the time. For year-long import surges the reaction percentages are lower for the award of state subsidies to import competing firms and for the award of export incentives.


TABLE 10.2G20 propensity to respond to import surges, by duration of surge, size of surge, and form of response

Duration of surge in years

Form of policy response by the nation experiencing the import surge Percentage of surges responded to with this type of policy response

All surgesSectors without Chinese excess

capacity

Excess capacity sectors: Broad

definition

Excess capacity sectors: Narrow

definition

1 Domestic subsidies 0.7% 0.7% 0.6% 1.6%

Export subsidies 0.7% 0.6% 1.1% 1.2%

All import barriers 3.9% 3.8% 3.4% 5.8%

Traditional import barriers 2.5% 2.5% 2.3% 2.7%





























Note: To indicate infrequently G20 governments respond to import surges where the percentage exceeds 10% it is marked in red.

Generally, when an import surge lasts two years the likelihood of G20 governments reacting with some form of discrimination in favour of local firms goes up. However, the reaction percentages are still very low. Irrespective of the size of the import surge, G20 governments offered subsidies to local firms less than one time in forty. For import surges over one billion US dollars the percentage of times G20 governments responded soon after by offering export incentives was only 7.5%. G20 governments have

at most one time in nine followed an import surge by increasing an import barrier on the same product or products.

In interpreting the percentages in Table 10.2 it is important to recall that they indicate whether a G20 government reacted by discriminating within one year of the import surge commencing. The percentages in this table do not strip out the cases where governments reacted for reasons other than the import surge. Therefore, the percentages reported in Table 10.2 over-estimate the


likelihood of a response due to an import surge.63 Since the percentages in this table are so small for import surge durations of four years or less (which account for 99.2% of all import surges into the G20), then it is difficult to make the case that, as a general rule, G20 governments respond frequently and consistently to import surges.

Matters change little if the response percentages are reported according whether the Chinese are thought to have excess capacity in a sector, see Table 10.3. Comparing the fourth, fifth, and sixth columns of this table is instructive. For import surges of one year in duration, a surge resulted in barriers to imports being raised in 3.6% of cases where no Chinese excess capacity problem exists and in 5% of cases in the seven sectors meeting the narrow definition of an excess capacity sector. For sure the latter percentage is higher, but only marginally.

For import surges of two years duration the respective probability jumps from 8.1% to 12.6% when attention focuses on the same seven sectors. Even in this case, in only one instance in eight has a G20 government responded with higher import barriers to a surge in shipments from abroad in those sectors where China has excess capacity.64

63 The same is true for the percentages reported in Table 10.3.

64 And note the import surge need not have come from China.

The response percentages of Table 10.3 do not show any tendency of governments to respond more often with export incentives in sectors with excess capacity. There is a small tendency to respond more often with domestic subsidies to firms competing in the same sector that are hit by import surges in sectors where China has excess capacity, especially for import surges of three years of duration.

Overall, studying the actual behaviour of G20 governments shows that they respond far less often to import surges, including import surges in sectors with excess capacity, than the rhetoric of their trade ministers and senior officials might suggest. Or put differently, over the past ten years G20 governments have absorbed import surges in excess capacity sectors without responding by raising trade barriers or bailing domestic firms that often. Whatever political pain is inflicted by their import surges have engendered protectionist policy responses seldomly. This is not to say that the political pain is non-existent or that in some sectors—such as steel—that the pain is not intense. However, such cases are the exception and not the rule.

TABLE 10.3G20 propensity to respond to import surges, by duration of surge, form of response, and degree of excess capacity

Duration of surge in years

Form of policy response by the nation experiencing the import surge

Percentage of surges responded to with this type of policy response

All surgesSectors without Chinese excess

capacity

Excess capacity sectors: Broad

definition

Excess capacitysectors:

Narrow definition










Export subsidies 2.0% 2.3% 1.6% 0%



4 Domestic subsidies 3.1% 4.3% 0% 0%

Export subsidies 1.5% 2.1% 0% 0%



Note: To indicate infrequently G20 governments respond to import surges where the percentage exceeds 10% it is marked in red.


Concluding remarksThe purpose of this chapter has been to use evidence on trade flows and government policy choice to put the circumstances of excess capacity sectors into perspective. These sectors, especially the seven sectors that China identified in 2013 as having excess capacity, do witness proportionally more government intervention around the world. However, these sectors account for a small fraction of world trade and of the import surges into the G20 nations.

When it comes to the cross-border ramifications of excess capacity, the empirical evidence presented here casts doubt on their frequency, the amount of share of G20 trade involved, and the capacity to induce policy responses in trading partners. There are plenty of import surges in sectors where there are no concerns about Chinese excess capacity. Moreover, irrespective of their source and any link to excess capacity, G20 governments have revealed by their own actions that they rarely react to

import surges. The link between Chinese excess capacity and import surges into the G20 by China is particularly weak.

What does this mean for deliberations by G20 officials? All of this casts doubt on the propositions that excess capacity is a systemic trade concern and that the G20 should reorient more of its trade policy work programme to tackling this “problem.”

ReferencesEvenett and Fritz (2018). Simon J. Evenett and Johannes Fritz. “US import surges as a pretext for protectionism.” VoxEU.org. 24 January.

Fan (2016). Rui Fan. China’s Excess Capacity: Drivers and Implications. Law Offices of Stewart and Stewart. February.

USCC (2014). U.S.-China Economic and Security Review Commission. “Section 2: State-owned enterprises, overcapacity, and China’s Market Economy Status.”

http://www.stewartlaw.com/Content/Documents/China’s%20Excess%20Capacity%20-%20Drivers%20and%20Implications.pdf

http://www.stewartlaw.com/Content/Documents/China’s%20Excess%20Capacity%20-%20Drivers%20and%20Implications.pdf

https://www.uscc.gov/sites/default/files/Annual_Report/Chapters/Chapter%201%2C%20Section%202%20-%20State-Owned%20Enterprises%2C%20Overcapacity%2C%20and%20China%27s%20Market%20Economy%20Status.pdf

https://www.uscc.gov/sites/default/files/Annual_Report/Chapters/Chapter%201%2C%20Section%202%20-%20State-Owned%20Enterprises%2C%20Overcapacity%2C%20and%20China%27s%20Market%20Economy%20Status.pdf


CHAPTER 11 RECOMMENDATIONS FOR THE GLOBAL FORUM ON STEEL EXCESS CAPACITY AND FOR THE G20 TRADE WORK PROGRAMME

Six recommendations follow from this report for the Global Forum and two for the G20’s work programme on trade.

With respect to the Global Forum, the first recommendation is that it stick to its position that a wide range of government policies can distort resource allocation and trade and investment flows in the steel sector. The shift in perspective away from a narrow set of traditional trade policies and from WTO compatibility, both unhelpful features of the original G20 pledge on protectionism, is supported by evidence on beggar-thy-neighbour policy undertaken in the steel sector presented here and elsewhere, including at the OECD Steel Committee.

The second recommendation is that the Global Forum should not rely solely on its members to report their own public policy interventions in the steel sector. The secretariat of the Global Forum should be able to collect information from official sources (websites, gazettes, etc) on relevant policy intervention. Should they do so, it is important that the Global Forum’s secretariat does not get caught in the same “verification trap” that has hampered the WTO secretariat’s monitoring of G20 protectionism.

Publication of the full inventory of public policy intervention, both distortionary and liberalising, by the members of the Global Forum is the third recommendation. Third parties are unlikely to attach much credibility to this initiative until full disclosure is the norm. The November 2017 report of the Global Forum was deficient in this regard, marking a step backwards from the (admittedly limited) official monitoring reports on the G20 protectionism pledge.

The fourth recommendation is that the emphasis on excess capacity in the steel sector per se is misplaced. From a system-wide perspective what matters are the cross-border consequences of such excess capacity. Those cross-border consequences need to better articulated and demonstrated by the Global Forum. Having done so, the policies that facilitate excess capacity and the

support the adverse cross-border knock-on effects (such as state-provided financial support for steel exports) should be the ultimate focus of the Global Forum’s work. This recommendation has all the more force given the difficulties in measuring excess capacity accurately and the difficulties in developing reasoned targets for excess capacity reductions or for utilisation rates in the steel sector.

Once the focus shifts to policy intervention, the fifth recommendation is that the Global Forum develop metrics by which its progress can be judged. Those metrics could include counts of distortionary policy interventions phased-out or reductions in total state-provided financial support.

The last recommendation is that the Global Forum judiciously employ published corporate financial information to identify potential differential policy treatment and its implications. For example, in our analysis of differential Chinese and non-Chinese financial performance of steel firms during the crisis era, evidence was presented that suggests that differential treatment in capital depreciation and allowances could be significant.

For the G20 work programme on trade, this report has two implications. The first is a plea for coherence. Having seen the wisdom of expanding discussions on the scope of commerce-distorting policy in the steel sector, a similar approach should be adopted in G20 deliberations on protectionism more generally. The international organisations responsible for monitoring G20 trade-related policy choice should be encouraged to widen the range of policies that they monitor.

The second recommendation for the G20 is to think twice about adopting the narrative that excess capacity is a systemic trade policy problem. The evidence suggested here is that it is not. Excess capacity should not become a pretext for the next bout of G20 protectionism.


CHAPTER 12 WHAT’S NEW IN THE GLOBAL TRADE ALERT DATABASE?

Since our 21st report was published in June 2017, a total of 2,422 new announced or implemented state acts have been added to the GTA database. Those state acts contain 2,653 new distinct policy interventions, representing a 21% expansion in the number of policy interventions documented in our database in our ninth year of operation. At the time of writing, the GTA includes information on 15,247 public policy interventions (as part of 13,575 announcements of state acts, some of the latter containing multiple policy interventions.)

Although the GTA team keeps its eye open to relevant policy developments around the world, from time to time relevant troves of information become available that are incorporated into our database. Before the publication of our last report, we incorporated a lot of tariff change information supplied by governments to the World Trade Organization. This time around we added 330 more reports on import tariff changes (around 60% of which were tariff increases) and over 1,400 discriminatory trade finance measures and measures to offer local firms financial assistance in foreign markets.

Trade finance has long evolved from its original rationale—namely, providing covering finance for small and medium sized exporters that cannot tap financial markets—and it has become a worrying source of export incentives and arguably a systemic trade concern. That this matter is often raised in G7 and G20 fora and nothing is ultimately done about it is saddening but, in these times, not terribly surprising. As we have argued in earlier reports, policy distortions to exports during contemporary times cover much more of world trade than restrictions on imports.

Compared to the contents of the GTA database at the time our last report was published, our coverage of non-G20 public policy intervention has expanded considerably. Our coverage of liberalising policy interventions expanded 15% for non-G20 countries compared to 7% for G20 members. Our coverage of discriminatory policy interventions rose 26% for non-G20 members as compared to 19% for G20 members. Worldwide, for every liberalising public policy intervention in the GTA database there are now 3.14

discriminatory policy interventions, suggesting that the former account for less than a quarter of the entries in our database.

The GTA team continues to improve its ability to scrape official websites. Johannes Fritz is taking the lead on this project and it offers the promise of substantially expanding our coverage of public policy intervention now and since the global economic crisis began. This is in addition to our attempts to discover more troves of public policy interventions that might alter the relative treatment of domestic firms vis-à-vis their foreign rivals.

We continue to take steps to reduce the potential for human error, in particular in the identification of trading partners affected by public policy intervention. Wherever possible we use publicly available international commercial data to identify affected trading partners.

Soon we will be making public our first estimates at the aggregate national and bilateral level of the shares of trade covered by different types of public policy interventions. The careful development and technical refinement of the processes to generate these trade coverage estimates has taken place over the past year. Their publication will further add to the summary statistics available on the extent of commerce affected by public policy intervention since the onset of the global economic crisis. Analysts will find the data in a form that can be readily incorporated into gravity equation studies of the determinants of bilateral trade flows.

Readers may be wondering why ten months have elapsed since the publication of our last report. This does not reflect a decision to reduce the frequency of report publication. Rather, we draw your attention to the fact that in December 2017 we published an extensive study of the impact of foreign protectionism on the relative growth of European Union exports vis-à-vis rivals from China, Japan, and the United States. That study, titled Europe Fettered and commissioned by the Swedish National Board of Trade, is available on the Global Trade Alert website.


WHAT IS THE GLOBAL TRADE ALERT?

The Global Trade Alert (GTA) was launched in June 2009 when many feared that the global financial crisis would lead governments to adopt widespread 1930s-style beggar-thy-neighbour policies. Although global in scope, the GTA has given particular attention to the policy choices of the G20 governments ever since their leaders made a “no protectionism” pledge in Washington DC in November 2008.

Initially conceived as a trade policy monitoring initiative, as thousands of policy announcements have been documented, the GTA has become a widely-used input for analysis and decision-making by firms, industry associations, journalists, researchers, international organisations, and governments. As of April 2018, the GTA has been mentioned or its data used in 1,400 entries in Google Scholar.

This usage reflects the fact that, as the International Monetary Fund noted in 2016, the GTA “has the most comprehensive coverage of all types of trade discriminatory and trade liberalizing measures.”

GTA is a policy-oriented and research initiative of the Centre for Economic Policy Research (CEPR), an independent academic and policy research think-tank based in London, UK. Simon J. Evenett, a Research Fellow of CEPR’s International Trade and Regional Economics Programme, is the coordinator of the GTA. The GTA is also an initiative associated with the Swiss Institute for International Economics at the University of St. Gallen, Switzerland. Most of the funding for the GTA comes from University of St. Gallen-related sources. For further information, visit www.GlobalTradeAlert.org

ACKNOWLEDGEMENTS

A dedicated team supports the operation of the Global Trade Alert and the production of reports such as this. I am indebted to every team member. The colleagues responsible for documenting the 2,653 new government public policy interventions in the GTA database were Callum Campbell, Andreas Foser, Chintan Jadwani, Josse Jakobsen, Piotr Lukaszuk, Adelina Selimi, Ana Elena Sancho, and Craig VanGrasstek. I thank the team for their hard work and commitment to high professional standards. Additional superb research assistance and programming support were provided by Patrick Buess and Tomas Dutra. This was a particularly research-intensive report and its preparation was greatly facilitated by the tenacity and diligence of Piotr Lukaszuk and Maxime Kantenwein.

Johannes Fritz not only took day-to-day responsibility for managing the GTA team and he also reviewed the first submissions of all of the measures reported. Anil Shamdasani deftly wove together the different parts of this report.

The Global Trade Alert is an initiative of the Centre for Economic Policy Research (CEPR), whose leadership has offered fulsome support since we started this venture in the second quarter of 2009. The funding from the Global Trade Alert comes principally from sources associated with the University of St. Gallen. Of the most important of these is the Max Schmidheiny Foundation, whose continued financial support and practical advice is greatly appreciated.

Simon J. Evenett, Coordinator

The Tide Turns? Trade, Protectionism, and Slowing Global Growth | 63

ANNEX FOR EACH GLOBAL FORUM MEMBER


ARGENTINAARGENTINA’S SHARE OF WORLD TRADE IN STEEL AND GLOBAL EXCESS CAPACITY

SUMMARY STATISTICS ON ARGENTINA’S GLOBAL MARKET SHARE OF STEEL PRODUCTION AND TRADE

Metric 2009 2010 2011 2012 2013 2014 2015 2016

Share of global steel capacity 0.38% 0.35% 0.33% 0.32% 0.29% 0.29% 0.28% 0.31%

Share of global steel production 0.32% 0.36% 0.36% 0.32% 0.31% 0.33% 0.31% 0.25%

Share of global excess capacity 0.50% 0.33% 0.23% 0.31% 0.23% 0.18% 0.22% 0.42%

Share of global steel exports 0.56% 0.45% 0.40% 0.47% 0.42% 0.43% 0.21% 0.14%

Share of global steel imports 0.27% 0.38% 0.36% 0.38% 0.33% 0.29% 0.39% 0.25%

Sources: The capacity data has been obtained from the OECD Steelmaking Capacity Database. Meanwhile, the production data relates to the Total Production of Crude Steel statistics compiled in the World Steel Association’s Steel Statistical Yearbooks. The trade statistics are based on the UN COMTRADE database.


SHAR

E O

F AR

GEN

TIN

A’S

STEE

L EX

PORT

S FA

CIN

G C

RISI

S-ER

A TR

ADE

DIS

TORT

ION

S,

OVE

RALL

AN

D B

Y CL

ASS

OF

POLI

CY IN

STRU

MEN

T

Polic

y in

stru

men

t20

0920

1020

1120

1220

1320

1420

1520

1620

1720

18N

umbe

r of

inte

rven

tion

s in

forc

e to

day

All i

nstr

umen

ts20

.5%

48.4

%48

.2%

50.1

%49

.1%

39.3

%43

.4%

44.1

%47

.4%

46.3

%91

D -

Cont

inge

nt tr

ade

prot

ecti

on0.

3%3.

2%3.

2%3.

2%3.

2%3.

2%3.

2%6.

8%7.

4%7.

4%4

E - N

on-a

utom

atic

lice

nsin

g, q

uota

s0.

0%0.

0%0.

1%0.

4%1.

3%4.

4%3.

7%4.

6%5.

0%5.

0%5

F - P

rice

con

trol

mea

sure

s0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0

G -

Fina

nce

mea

sure

s0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0

I - In

vest

men

t mea

sure

s0.

3%0.

6%0.

7%0.

6%0.

0%2.

7%4.

7%4.

7%4.

7%4.

7%2

L - S

ubsi

dies

(exc

ept e

xpor

t sub

sidi

es)

2.7%

3.2%

0.5%

0.5%

0.5%

0.5%

10.7

%11

.5%

11.6

%11

.6%

11

M -

Gov

ernm

ent p

rocu

rem

ent

4.2%

5.4%

7.4%

7.6%

7.6%

7.4%

7.4%

7.4%

7.4%

7.4%

50

P - E

xpor

t mea

sure

s15

.4%

42.8

%44

.7%

47.6

%45

.8%

33.6

%31

.1%

32.1

%40

.3%

40.3

%15

Impo

rt ta

riff

mea

sure

s0.

3%0.

3%0.

0%0.

0%0.

4%2.

2%4.

5%5.

0%3.

5%3.

1%4

Inst

rum

ent u

ncla

ssifi

ed0.

5%0.

6%0.

6%0.

6%0.

6%0.

6%0.

6%0.

6%0.

0%0.

0%0

SHAR

E O

F AR

GEN

TIN

A’S

STEE

L IM

PORT

S FA

CIN

G C

RISI

S-ER

A TR

ADE

DIS

TORT

ION

S IM

POSE

D

BY A

RGEN

TIN

A, O

VERA

LL A

ND

BY

CLAS

S O

F PO

LICY

INST

RUM

ENT

Polic

y in

stru

men

t20

0920

1020

1120

1220

1320

1420

1520

1620

1720

18N

umbe

r of

inte

rven

tion

s in

forc

e to

day

All i

nstr

umen

ts1.

3%1.

3%5.

5%78

.3%

84.8

%84

.8%

84.8

%9.

6%12

.3%

12.5

%10

D -

Cont

inge

nt tr

ade

prot

ecti

on0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%1

E - N

on-a

utom

atic

lice

nsin

g, q

uota

s1.

1%1.

1%5.

3%77

.5%

84.1

%84

.1%

84.1

%6.

4%8.

6%8.

8%3

F - P

rice

con

trol

mea

sure

s0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0

G -

Fina

nce

mea

sure

s0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0

I - In

vest

men

t mea

sure

s0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0

L - S

ubsi

dies

(exc

ept e

xpor

t sub

sidi

es)

0.0%

0.0%

0.0%

0.0%

0.0%

0.0%

0.0%

0.0%

0.0%

0.0%

0

M -

Gov

ernm

ent p

rocu

rem

ent

0.0%

0.0%

0.0%

0.0%

0.0%

0.0%

0.0%

0.0%

0.0%

0.0%

0

Impo

rt ta

riff

mea

sure

s0.

1%0.

2%0.

2%2.

9%3.

5%3.

5%3.

5%3.

5%4.

1%4.

1%6

Inst

rum

ent u

ncla

ssifi

ed0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0

Not

e: S

ince

a tr

ade

flow

can

face

mor

e th

an o

ne tr

ade

dist

ortio

n th

en th

e st

atis

tics

for “

all i

nstr

umen

ts” m

ay b

e le

ss th

an th

e su

m o

f all

of th

e ro

ws

bene

ath

it.


AUSTRALIAAUSTRALIA’S SHARE OF WORLD TRADE IN STEEL AND GLOBAL EXCESS CAPACITY

SUMMARY STATISTICS ON AUSTRALIA’S GLOBAL MARKET SHARE OF STEEL PRODUCTION AND TRADE

Metric 2009 2010 2011 2012 2013 2014 2015 2016








SHAR

E O

F AU

STRA

LIA’

S ST

EEL

EXPO

RTS

FACI

NG

CRI

SIS-

ERA

TRAD

E D

ISTO

RTIO

NS,

O

VERA

LL A

ND

BY

CLAS

S O

F PO

LICY

INST

RUM

ENT

Polic

y in

stru

men

t20

0920

1020

1120

1220

1320

1420

1520

1620

1720

18N

umbe

r of

inte

rven

tion

s in

forc

e to

day

All i

nstr

umen

ts38

.7%

67.0

%67

.7%

68.2

%71

.1%

56.1

%54

.4%

54.9

%54

.7%

54.7

%86

D -

Cont

inge

nt tr

ade

prot

ecti

on0.

0%0.

0%0.

0%0.

0%0.

2%4.

0%6.

9%18

.4%

20.5

%20

.5%

7

E - N

on-a

utom

atic

lice

nsin

g, q

uota

s0.

0%0.

6%1.

0%0.

3%3.

1%3.

3%2.

8%5.

9%7.

0%7.

0%1

F - P

rice

con

trol

mea

sure

s0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0

G -

Fina

nce

mea

sure

s0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0

I - In

vest

men

t mea

sure

s0.

1%0.

2%0.

2%0.

2%0.

0%6.

6%11

.8%

11.8

%11

.8%

11.8

%3

L - S

ubsi

dies

(exc

ept e

xpor

t sub

sidi

es)

0.0%

1.3%

5.0%

25.0

%25

.5%

25.5

%26

.2%

27.6

%28

.2%

28.2

%12

M -

Gov

ernm

ent p

rocu

rem

ent

20.8

%21

.5%

14.7

%21

.9%

24.2

%24

.2%

24.4

%24

.9%

25.0

%25

.0%

47

P - E

xpor

t mea

sure

s21

.5%

53.2

%53

.5%

54.9

%56

.5%

47.8

%41

.8%

40.1

%40

.8%

40.8

%12

Impo

rt ta

riff

mea

sure

s0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%2.

2%4

Inst

rum

ent u

ncla

ssifi

ed0.

7%0.

8%0.

8%0.

8%0.

8%0.

8%0.

8%0.

8%0.

0%0.

0%0

SHAR

E O

F AU

STRA

LIA’

S ST

EEL

IMPO

RTS

FACI

NG

CRI

SIS-

ERA

TRAD

E D

ISTO

RTIO

NS

IMPO

SED

BY

AU

STRA

LIA,

OVE

RALL

AN

D B

Y CL

ASS

OF

POLI

CY IN

STRU

MEN

T

Polic

y in

stru

men

t20

0920

1020

1120

1220

1320

1420

1520

1620

1720

18N

umbe

r of

inte

rven

tion

s in

forc

e to

day

All i

nstr

umen

ts0%

0%0%

1.8%

8.4%

12.3

%15

.9%

39.2

%39

.2%

39.3

%23

D -

Cont

inge

nt tr

ade

prot

ecti

on0%

0%0%

1.8%

8.4%

12.3

%15

.9%

17.1

%17

.2%

17.3

%21

E - N

on-a

utom

atic

lice

nsin

g, q

uota

s0%

0%0%

0.0%

0.0%

0.0%

0.0%

0.0%

0.0%

0.0%

0

F - P

rice

con

trol

mea

sure

s0%

0%0%

0.0%

0.0%

0.0%

0.0%

0.0%

0.0%

0.0%

0

G -

Fina

nce

mea

sure

s0%

0%0%

0.0%

0.0%

0.0%

0.0%

0.0%

0.0%

0.0%

0

I - In

vest

men

t mea

sure

s0%

0%0%

0.0%

0.0%

0.0%

0.0%

8.9%

13.1

%13

.1%

1

L - S

ubsi

dies

(exc

ept e

xpor

t sub

sidi

es)

0%0%

0%0.

0%0.

0%0.

0%0.

0%33

.3%

33.3

%33

.3%

1

M -

Gov

ernm

ent p

rocu

rem

ent

0%0%

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0

Impo

rt ta

riff

mea

sure

s0%

0%0%

0.0%

0.0%

0.0%

0.0%

0.0%

0.0%

0.0%

0

Inst

rum

ent u

ncla

ssifi

ed0%

0%0%

0.0%

0.0%

0.0%

0.0%

0.0%

0.0%

0.0%

0

Not

e: S

ince

a tr

ade

flow

can

face

mor

e th

an o

ne tr

ade

dist

ortio

n th

en th

e st

atis

tics

for “

all i

nstr

umen

ts” m

ay b

e le

ss th

an th

e su

m o

f all

of th

e ro

ws

bene

ath

it.


BRAZILBRAZIL’S SHARE OF WORLD TRADE IN STEEL AND GLOBAL EXCESS CAPACITY

SUMMARY STATISTICS ON BRAZIL’S GLOBAL MARKET SHARE OF STEEL PRODUCTION AND TRADE

Metric 2009 2010 2011 2012 2013 2014 2015 2016








SHAR

E O

F BR

AZIL

’S S

TEEL

EXP

ORT

S FA

CIN

G C

RISI

S-ER

A TR

ADE

DIS

TORT

ION

S, O

VERA

LL A

ND

BY

CLAS

S O

F PO

LICY

INST

RUM

ENT

Polic

y in

stru

men

t20

0920

1020

1120

1220

1320

1420

1520

1620

1720

18N

umbe

r of

inte

rven

tion

s in

forc

e to

day

All i

nstr

umen

ts26

.8%

35.9

%39

.8%

46.8

%50

.1%

52.7

%57

.0%

61.0

%63

.2%

63.7

%12

9

D -

Cont

inge

nt tr

ade

prot

ecti

on0.

0%0.

0%0.

2%0.

3%0.

4%0.

9%0.

6%9.

1%12

.2%

17.9

%23

E - N

on-a

utom

atic

lice

nsin

g, q

uota

s0.

0%0.

0%0.

7%7.

4%8.

1%9.

4%9.

4%8.

2%11

.1%

11.1

%13

F - P

rice

con

trol

mea

sure

s0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0

G -

Fina

nce

mea

sure

s0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0

I - In

vest

men

t mea

sure

s0.

0%0.

0%0.

0%0.

0%0.

0%9.

6%17

.1%

17.1

%17

.1%

17.1

%3

L - S

ubsi

dies

(exc

ept e

xpor

t sub

sidi

es)

0.0%

2.3%

10.5

%13

.1%

18.2

%18

.7%

21.1

%23

.6%

24.5

%24

.5%

15

M -

Gov

ernm

ent p

rocu

rem

ent

19.2

%20

.0%

22.1

%22

.1%

22.3

%22

.5%

24.5

%25

.5%

25.6

%25

.7%

52

P - E

xpor

t mea

sure

s8.

7%19

.5%

20.3

%22

.0%

36.7

%39

.0%

33.5

%49

.5%

50.9

%50

.9%

13

Impo

rt ta

riff

mea

sure

s0.

2%0.

1%0.

0%0.

0%0.

0%0.

0%0.

2%0.

5%1.

3%3.

6%8

Inst

rum

ent u

ncla

ssifi

ed0.

0%0.

4%0.

4%0.

4%0.

0%0.

0%0.

0%0.

1%0.

1%0.

1%2

SHAR

E O

F BR

AZIL

’S S

TEEL

IMPO

RTS

FACI

NG

CRI

SIS-

ERA

TRAD

E D

ISTO

RTIO

NS

IMPO

SED

BY

BRA

ZIL,

OVE

RALL

AN

D B

Y CL

ASS

OF

POLI

CY IN

STRU

MEN

T

Polic

y in

stru

men

t20

0920

1020

1120

1220

1320

1420

1520

1620

1720

18N

umbe

r of

inte

rven

tion

s in

forc

e to

day

All i

nstr

umen

ts5.

9%7%

7.1%

14.2

%28

.0%

14.4

%14

.7%

15.4

%15

.6%

15.6

%19

D -

Cont

inge

nt tr

ade

prot

ecti

on0.

0%0%

0.1%

0.2%

2.2%

7.8%

8.0%

8.7%

9.3%

9.3%

16

E - N

on-a

utom

atic

lice

nsin

g, q

uota

s1.

9%0%

0.0%

0.0%

0.0%

0.0%

0.0%

0.0%

0.0%

0.0%

0

F - P

rice

con

trol

mea

sure

s0.

0%0%

0.0%

0.0%

0.0%

0.0%

0.0%

0.0%

0.0%

0.0%

0

G -

Fina

nce

mea

sure

s0.

0%0%

0.0%

0.0%

0.0%

0.0%

0.0%

0.0%

0.0%

0.0%

0

I - In

vest

men

t mea

sure

s0.

0%0%

0.0%

0.0%

0.0%

0.0%

0.0%

0.0%

0.0%

0.0%

0

L - S

ubsi

dies

(exc

ept e

xpor

t sub

sidi

es)

0.0%

0%0.

0%0.

0%0.

0%0.

0%0.

1%0.

1%0.

0%0.

0%0

M -

Gov

ernm

ent p

rocu

rem

ent

0.0%

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0

Impo

rt ta

riff

mea

sure

s4.

0%7%

7.0%

14.0

%27

.9%

7.0%

7.0%

7.0%

7.0%

7.0%

3

Inst

rum

ent u

ncla

ssifi

ed0.

0%0%

0.0%

0.0%

0.0%

0.0%

0.0%

0.0%

0.0%

0.0%

0

Not

e: S

ince

a tr

ade

flow

can

face

mor

e th

an o

ne tr

ade

dist

ortio

n th

en th

e st

atis

tics

for “

all i

nstr

umen

ts” m

ay b

e le

ss th

an th

e su

m o

f all

of th

e ro

ws

bene

ath

it.


CANADACANADA’S SHARE OF WORLD TRADE IN STEEL AND GLOBAL EXCESS CAPACITY

SUMMARY STATISTICS ON CANADA’S GLOBAL MARKET SHARE OF STEEL PRODUCTION AND TRADE

Metric 2009 2010 2011 2012 2013 2014 2015 2016








SHAR

E O

F CA

NAD

A’S

STEE

L EX

PORT

S FA

CIN

G C

RISI

S-ER

A TR

ADE

DIS

TORT

ION

S, O

VERA

LL A

ND

BY

CLAS

S O

F PO

LICY

INST

RUM

ENT

Polic

y in

stru

men

t20

0920

1020

1120

1220

1320

1420

1520

1620

1720

18N

umbe

r of

inte

rven

tion

s in

forc

e to

day

All i

nstr

umen

ts80

.3%

94.5

%95

.3%

95.6

%95

.7%

95.4

%95

.2%

95.5

%95

.6%

95.5

%94

D -

Cont

inge

nt tr

ade

prot

ecti

on0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%48

.9%

58.2

%63

.8%

3

E - N

on-a

utom

atic

lice

nsin

g, q

uota

s0.

0%0.

0%0.

0%0.

0%0.

2%2.

0%2.

2%3.

0%3.

1%3.

1%5

F - P

rice

con

trol

mea

sure

s0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0

G -

Fina

nce

mea

sure

s0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0

I - In

vest

men

t mea

sure

s0.

0%0.

0%0.

0%0.

0%0.

0%49

.0%

87.2

%87

.2%

87.2

%87

.2%

1

L - S

ubsi

dies

(exc

ept e

xpor

t sub

sidi

es)

0.0%

0.4%

6.5%

36.0

%64

.5%

64.6

%64

.6%

64.8

%64

.8%

64.8

%14

M -

Gov

ernm

ent p

rocu

rem

ent

76.4

%86

.7%

87.8

%87

.8%

87.8

%87

.8%

87.8

%88

.1%

88.2

%88

.1%

49

P - E

xpor

t mea

sure

s37

.1%

73.9

%75

.5%

76.8

%76

.4%

77.7

%73

.0%

84.4

%85

.3%

85.3

%16

Impo

rt ta

riff

mea

sure

s0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

4%1.

2%0.

1%6

Inst

rum

ent u

ncla

ssifi

ed0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0

SHAR

E O

F CA

NAD

A’S

STEE

L IM

PORT

S FA

CIN

G C

RISI

S-ER

A TR

ADE

DIS

TORT

ION

S IM

POSE

D

BY C

ANAD

A, O

VERA

LL A

ND

BY

CLAS

S O

F PO

LICY

INST

RUM

ENT

Polic

y in

stru

men

t20

0920

1020

1120

1220

1320

1420

1520

1620

1720

18N

umbe

r of

inte

rven

tion

s in

forc

e to

day

All i

nstr

umen

ts1.

4%8.

9%8.

9%9.

3%10

.3%

11.3

%70

.0%

73.2

%75

.2%

85.2

%33

D -

Cont

inge

nt tr

ade

prot

ecti

on1.

4%8.

9%8.

9%9.

3%10

.3%

11.3

%12

.4%

12.6

%23

.3%

77.8

%29

E - N

on-a

utom

atic

lice

nsin

g, q

uota

s0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0

F - P

rice

con

trol

mea

sure

s0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0

G -

Fina

nce

mea

sure

s0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0

I - In

vest

men

t mea

sure

s0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0

L - S

ubsi

dies

(exc

ept e

xpor

t sub

sidi

es)

0.0%

0.0%

0.0%

0.0%

0.0%

0.0%

49.8

%62

.9%

62.9

%62

.9%

3

M -

Gov

ernm

ent p

rocu

rem

ent

0.0%

0.0%

0.0%

0.0%

0.0%

0.0%

59.8

%62

.9%

62.9

%62

.9%

1

Impo

rt ta

riff

mea

sure

s0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0

Inst

rum

ent u

ncla

ssifi

ed0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0

Not

e: S

ince

a tr

ade

flow

can

face

mor

e th

an o

ne tr

ade

dist

ortio

n th

en th

e st

atis

tics

for “

all i

nstr

umen

ts” m

ay b

e le

ss th

an th

e su

m o

f all

of th

e ro

ws

bene

ath

it.


CHINACHINA’S SHARE OF WORLD TRADE IN STEEL AND GLOBAL EXCESS CAPACITY

SUMMARY STATISTICS ON CHINA’S GLOBAL MARKET SHARE OF STEEL PRODUCTION AND TRADE

Metric 2009 2010 2011 2012 2013 2014 2015 2016








SHAR

E O

F CH

INA’

S ST

EEL

EXPO

RTS

FACI

NG

CRI

SIS-

ERA

TRAD

E D

ISTO

RTIO

NS,

OVE

RALL

AN

D B

Y CL

ASS

OF

POLI

CY IN

STRU

MEN

T

Polic

y in

stru

men

t20

0920

1020

1120

1220

1320

1420

1520

1620

1720

18N

umbe

r of

inte

rven

tion

s in

forc

e to

day

All i

nstr

umen

ts22

.5%

48.6

%52

.6%

56.1

%59

.2%

58.3

%52

.7%

62.6

%63

.7%

64.0

%35

3

D -

Cont

inge

nt tr

ade

prot

ecti

on4.

5%7.

3%8.

5%9.

5%11

.6%

15.1

%18

.9%

27.5

%35

.3%

37.8

%16

8

E - N

on-a

utom

atic

lice

nsin

g, q

uota

s0.

0%0.

8%1.

3%0.

8%2.

6%2.

4%1.

1%10

.8%

15.4

%15

.4%

9

F - P

rice

con

trol

mea

sure

s0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0

G -

Fina

nce

mea

sure

s0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0

I - In

vest

men

t mea

sure

s0.

3%0.

6%0.

7%0.

7%0.

2%7.

1%12

.4%

12.7

%12

.8%

12.8

%6

L - S

ubsi

dies

(exc

ept e

xpor

t sub

sidi

es)

0.6%

4.8%

5.9%

7.6%

11.7

%13

.4%

17.4

%22

.3%

23.6

%23

.6%

35

M -

Gov

ernm

ent p

rocu

rem

ent

11.1

%12

.8%

12.8

%12

.9%

12.9

%12

.9%

14.0

%15

.2%

16.3

%16

.9%

54

P - E

xpor

t mea

sure

s10

.6%

38.9

%42

.0%

46.7

%50

.0%

44.6

%34

.4%

45.2

%47

.1%

47.0

%17

Impo

rt ta

riff

mea

sure

s0.

5%0.

8%0.

4%0.

5%0.

9%15

.7%

2.2%

2.6%

2.6%

4.2%

61

Inst

rum

ent u

ncla

ssifi

ed1.

4%3.

3%3.

3%3.

2%1.

5%1.

5%1.

5%2.

9%1.

7%1.

7%3

SHAR

E O

F CH

INA’

S ST

EEL

IMPO

RTS

FACI

NG

CRI

SIS-

ERA

TRAD

E D

ISTO

RTIO

NS

IMPO

SED

BY

CH

INA,

OVE

RALL

AN

D B

Y CL

ASS

OF

POLI

CY IN

STRU

MEN

T

Polic

y in

stru

men

t20

0920

1020

1120

1220

1320

1420

1520

1620

1720

18N

umbe

r of

inte

rven

tion

s in

forc

e to

day

All i

nstr

umen

ts0.

1%1.

5%27

.4%

30.5

%32

.3%

34.6

%38

.3%

48.1

%69

.5%

69.5

%8

D -

Cont

inge

nt tr

ade

prot

ecti

on0.

1%1.

5%1.

5%5.

2%7.

3%8.

1%7.

0%8.

3%7.

7%7.

7%3

E - N

on-a

utom

atic

lice

nsin

g, q

uota

s0.

0%0.

0%27

.4%

27.4

%27

.4%

27.4

%27

.4%

27.4

%27

.4%

27.4

%2

F - P

rice

con

trol

mea

sure

s0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0

G -

Fina

nce

mea

sure

s0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0

I - In

vest

men

t mea

sure

s0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0

L - S

ubsi

dies

(exc

ept e

xpor

t sub

sidi

es)

0.0%

0.0%

0.0%

0.0%

0.0%

0.0%

0.0%

10.5

%33

.3%

33.3

%1

M -

Gov

ernm

ent p

rocu

rem

ent

0.0%

0.0%

0.0%

0.0%

0.0%

0.0%

0.0%

0.0%

0.0%

0.0%

0

Impo

rt ta

riff

mea

sure

s0.

0%0.

0%0.

0%0.

0%0.

0%5.

8%10

.6%

10.6

%10

.6%

10.6

%2

Inst

rum

ent u

ncla

ssifi

ed0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0

Not

e: S

ince

a tr

ade

flow

can

face

mor

e th

an o

ne tr

ade

dist

ortio

n th

en th

e st

atis

tics

for “

all i

nstr

umen

ts” m

ay b

e le

ss th

an th

e su

m o

f all

of th

e ro

ws

bene

ath

it.


EUROPEAN UNIONTHE EU’S SHARE OF WORLD TRADE IN STEEL AND GLOBAL EXCESS CAPACITY

SUMMARY STATISTICS ON THE EU’S GLOBAL MARKET SHARE OF STEEL PRODUCTION AND TRADE

Metric 2009 2010 2011 2012 2013 2014 2015 2016






Sources: The capacity data has been obtained from the OECD Steelmaking Capacity Database. Meanwhile, the production data relates to the Total Production of Crude Steel statistics compiled in the World Steel Association’s Steel Statistical Yearbooks. The trade statistics are based on the UN COMTRADE database. All statistics in this annex for the European Union refer to extra-EU trade.


SHAR

E O

F TH

E EU

’S S

TEEL

EXP

ORT

S FA

CIN

G C

RISI

S-ER

A TR

ADE

DIS

TORT

ION

S, O

VERA

LL A

ND

BY

CLAS

S O

F PO

LICY

INST

RUM

ENT

Polic

y in

stru

men

t20

0920

1020

1120

1220

1320

1420

1520

1620

1720

18N

umbe

r of

inte

rven

tion

s in

forc

e to

day

All i

nstr

umen

ts30

.2%

47.2

%50

.6%

53.7

%55

.9%

58.0

%61

.6%

63.5

%65

.3%

65.3

%55

D -

Cont

inge

nt tr

ade

prot

ecti

on0.

3%0.

7%0.

7%2.

4%3.

5%4.

0%4.

5%11

.6%

13.0

%15

.4%

27

E - N

on-a

utom

atic

lice

nsin

g, q

uota

s0.

0%0.

1%3.

3%3.

7%4.

1%4.

7%4.

3%4.

4%4.

5%4.

5%3

F - P

rice

con

trol

mea

sure

s0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0

G -

Fina

nce

mea

sure

s0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0

I - In

vest

men

t mea

sure

s0.

1%0.

3%0.

4%0.

4%0.

2%9.

5%16

.7%

16.7

%16

.7%

16.7

%0

L - S

ubsi

dies

(exc

ept e

xpor

t sub

sidi

es)

0.0%

0.1%

1.0%

6.6%

14.4

%15

.0%

17.9

%19

.9%

20.4

%20

.4%

7

M -

Gov

ernm

ent p

rocu

rem

ent

15.3

%17

.5%

17.4

%17

.9%

18.1

%18

.3%

20.0

%20

.3%

21.3

%21

.9%

3

P - E

xpor

t mea

sure

s20

.4%

40.4

%41

.8%

45.0

%47

.1%

48.6

%49

.2%

52.7

%54

.9%

54.9

%10

Impo

rt ta

riff

mea

sure

s0.

6%2.

7%2.

4%3.

0%4.

0%6.

4%9.

2%9.

2%9.

5%12

.1%

5

Inst

rum

ent u

ncla

ssifi

ed0.

2%0.

2%0.

2%0.

2%0.

2%0.

2%0.

2%1.

0%1.

0%1.

0%0

SHAR

E O

F TH

E EU

’S S

TEEL

IMPO

RTS

FACI

NG

CRI

SIS-

ERA

TRAD

E D

ISTO

RTIO

NS

IMPO

SED

BY

TH

E EU

, OVE

RALL

AN

D B

Y CL

ASS

OF

POLI

CY IN

STRU

MEN

T

Polic

y in

stru

men

t20

0920

1020

1120

1220

1320

1420

1520

1620

1720

18N

umbe

r of

inte

rven

tion

s in

forc

e to

day

All i

nstr

umen

ts6.

9%20

.0%

20.8

%21

.3%

17.3

%35

.4%

29.1

%59

.3%

67.7

%67

.9%

45

D -

Cont

inge

nt tr

ade

prot

ecti

on4.

3%4.

8%5.

2%5.

9%6.

9%7.

0%8.

4%12

.0%

18.7

%23

.6%

27

E - N

on-a

utom

atic

lice

nsin

g, q

uota

s0.

1%0.

1%0.

1%0.

1%0.

1%0.

1%0.

1%34

.0%

50.4

%50

.5%

3

F - P

rice

con

trol

mea

sure

s0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0

G -

Fina

nce

mea

sure

s0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0

I - In

vest

men

t mea

sure

s0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0

L - S

ubsi

dies

(exc

ept e

xpor

t sub

sidi

es)

2.7%

10.3

%10

.8%

10.8

%10

.8%

13.7

%21

.4%

35.8

%39

.1%

39.1

%7

M -

Gov

ernm

ent p

rocu

rem

ent

0.0%

0.0%

0.0%

0.0%

0.0%

0.0%

0.4%

3.4%

3.6%

3.6%

3

Impo

rt ta

riff

mea

sure

s0.

0%0.

0%0.

0%0.

0%0.

0%19

.8%

1.1%

1.0%

1.4%

1.4%

5

Inst

rum

ent u

ncla

ssifi

ed0.

2%5.

9%5.

9%5.

7%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0

Not

e: S

ince

a tr

ade

flow

can

face

mor

e th

an o

ne tr

ade

dist

ortio

n th

en th

e st

atis

tics

for “

all i

nstr

umen

ts” m

ay b

e le

ss th

an th

e su

m o

f all

of th

e ro

ws

bene

ath

it.


INDIAINDIA’S SHARE OF WORLD TRADE IN STEEL AND GLOBAL EXCESS CAPACITY

SUMMARY STATISTICS ON INDIA’S GLOBAL MARKET SHARE OF STEEL PRODUCTION AND TRADE

Metric 2009 2010 2011 2012 2013 2014 2015 2016








SHAR

E O

F IN

DIA

’S S

TEEL

EXP

ORT

S FA

CIN

G C

RISI

S-ER

A TR

ADE

DIS

TORT

ION

S, O

VERA

LL A

ND

BY

CLAS

S O

F PO

LICY

INST

RUM

ENT

Polic

y in

stru

men

t20

0920

1020

1120

1220

1320

1420

1520

1620

1720

18N

umbe

r of

inte

rven

tion

s in

forc

e to

day

All i

nstr

umen

ts28

.1%

45.1

%47

.2%

47.6

%47

.4%

60.0

%54

.1%

61.5

%63

.5%

63.6

%16

4

D -

Cont

inge

nt tr

ade

prot

ecti

on0.

1%0.

3%1.

9%3.

1%5.

5%8.

0%8.

1%15

.2%

17.3

%18

.8%

48

E - N

on-a

utom

atic

lice

nsin

g, q

uota

s0.

1%0.

9%1.

2%1.

0%1.

5%1.

5%1.

2%16

.2%

23.4

%23

.4%

6

F - P

rice

con

trol

mea

sure

s0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0

G -

Fina

nce

mea

sure

s0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0

I - In

vest

men

t mea

sure

s0.

0%0.

5%0.

7%0.

7%0.

6%9.

5%16

.3%

16.3

%16

.3%

16.3

%4

L - S

ubsi

dies

(exc

ept e

xpor

t sub

sidi

es)

0.4%

3.9%

5.3%

9.3%

15.9

%16

.4%

20.1

%27

.7%

31.8

%31

.8%

25

M -

Gov

ernm

ent p

rocu

rem

ent

13.5

%15

.5%

15.5

%15

.8%

15.9

%16

.0%

16.8

%20

.0%

20.4

%20

.3%

51

P - E

xpor

t mea

sure

s17

.7%

35.9

%36

.3%

36.9

%34

.4%

29.4

%33

.6%

39.1

%39

.7%

39.8

%10

Impo

rt ta

riff

mea

sure

s0.

4%0.

7%0.

9%0.

9%0.

9%29

.3%

1.8%

2.4%

4.8%

7.2%

20

Inst

rum

ent u

ncla

ssifi

ed1.

8%2.

5%2.

5%2.

5%2.

0%2.

0%2.

0%2.

0%0.

0%0.

0%0

SHAR

E O

F IN

DIA

’S S

TEEL

IMPO

RTS

FACI

NG

CRI

SIS-

ERA

TRAD

E D

ISTO

RTIO

NS

IMPO

SED

BY

IND

IA, O

VERA

LL A

ND

BY

CLAS

S O

F PO

LICY

INST

RUM

ENT

Polic

y in

stru

men

t20

0920

1020

1120

1220

1320

1420

1520

1620

1720

18N

umbe

r of

inte

rven

tion

s in

forc

e to

day

All i

nstr

umen

ts4.

2%34

.6%

34.6

%37

.4%

39.9

%44

.3%

44.8

%63

.8%

74.9

%78

.2%

23

D -

Cont

inge

nt tr

ade

prot

ecti

on2.

9%4.

2%4.

2%4.

2%4.

2%6.

9%11

.3%

21.7

%33

.7%

33.3

%11

E - N

on-a

utom

atic

lice

nsin

g, q

uota

s0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0

F - P

rice

con

trol

mea

sure

s0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0

G -

Fina

nce

mea

sure

s0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0

I - In

vest

men

t mea

sure

s0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0

L - S

ubsi

dies

(exc

ept e

xpor

t sub

sidi

es)

0.0%

0.0%

0.0%

0.0%

2.5%

8.7%

8.7%

8.7%

8.7%

8.7%

1

M -

Gov

ernm

ent p

rocu

rem

ent

0.0%

0.0%

0.0%

0.0%

0.0%

0.0%

0.0%

0.0%

31.2

%46

.8%

1

Impo

rt ta

riff

mea

sure

s1.

4%33

.1%

33.1

%35

.9%

36.6

%36

.7%

36.9

%37

.5%

37.7

%38

.7%

8

Inst

rum

ent u

ncla

ssifi

ed0.

0%0.

0%0.

0%0.

0%0.

1%0.

1%0.

1%33

.3%

42.2

%42

.2%

2

Not

e: S

ince

a tr

ade

flow

can

face

mor

e th

an o

ne tr

ade

dist

ortio

n th

en th

e st

atis

tics

for “

all i

nstr

umen

ts” m

ay b

e le

ss th

an th

e su

m o

f all

of th

e ro

ws

bene

ath

it.


INDONESIAINDONESIA’S SHARE OF WORLD TRADE IN STEEL AND GLOBAL EXCESS CAPACITY

SUMMARY STATISTICS ON INDONESIA’S GLOBAL MARKET SHARE OF STEEL PRODUCTION AND TRADE

Metric 2009 2010 2011 2012 2013 2014 2015 2016








SHAR

E O

F IN

DO

NES

IA’S

STE

EL E

XPO

RTS

FACI

NG

CRI

SIS-

ERA

TRAD

E D

ISTO

RTIO

NS,

O

VERA

LL A

ND

BY

CLAS

S O

F PO

LICY

INST

RUM

ENT

Polic

y in

stru

men

t20

0920

1020

1120

1220

1320

1420

1520

1620

1720

18N

umbe

r of

inte

rven

tion

s in

forc

e to

day

All i

nstr

umen

ts20

.4%

45.0

%46

.9%

47.4

%51

.9%

50.2

%46

.6%

45.9

%49

.0%

49.4

%11

1

D -

Cont

inge

nt tr

ade

prot

ecti

on0.

1%0.

2%0.

2%0.

3%0.

4%1.

8%6.

5%7.

0%6.

9%7.

3%23

E - N

on-a

utom

atic

lice

nsin

g, q

uota

s0.

0%1.

5%2.

4%0.

9%7.

8%7.

6%5.

7%6.

2%6.

5%6.

5%2

F - P

rice

con

trol

mea

sure

s0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0

G -

Fina

nce

mea

sure

s0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0

I - In

vest

men

t mea

sure

s0.

0%0.

0%0.

0%0.

0%0.

0%0.

4%0.

7%0.

7%0.

7%0.

7%2

L - S

ubsi

dies

(exc

ept e

xpor

t sub

sidi

es)

0.0%

2.6%

3.6%

3.7%

3.9%

4.1%

4.6%

5.0%

5.0%

5.0%

12

M -

Gov

ernm

ent p

rocu

rem

ent

0.4%

0.5%

0.8%

1.0%

1.0%

0.8%

0.8%

0.8%

1.3%

2.3%

49

P - E

xpor

t mea

sure

s20

.2%

42.8

%43

.5%

45.6

%47

.0%

45.7

%42

.3%

41.5

%44

.8%

44.8

%14

Impo

rt ta

riff

mea

sure

s0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

4%8

Inst

rum

ent u

ncla

ssifi

ed0.

0%0.

9%0.

9%0.

9%0.

0%0.

0%0.

0%0.

1%0.

1%0.

1%1

SHAR

E O

F IN

DO

NES

IA’S

STE

EL IM

PORT

S FA

CIN

G C

RISI

S-ER

A TR

ADE

DIS

TORT

ION

S IM

POSE

D

BY IN

DO

NES

IA, O

VERA

LL A

ND

BY

CLAS

S O

F PO

LICY

INST

RUM

ENT

Polic

y in

stru

men

t20

0920

1020

1120

1220

1320

1420

1520

1620

1720

18N

umbe

r of

inte

rven

tion

s in

forc

e to

day

All i

nstr

umen

ts46

.2%

53.1

%53

.2%

53.2

%53

.5%

59.6

%62

.4%

75.1

%46

.1%

44.7

%12

D -

Cont

inge

nt tr

ade

prot

ecti

on0.

0%0.

0%2.

0%4.

6%13

.1%

19.0

%19

.7%

20.4

%19

.2%

17.3

%9

E - N

on-a

utom

atic

lice

nsin

g, q

uota

s0.

0%0.

0%0.

0%0.

0%0.

0%3.

9%6.

7%6.

7%0.

0%0.

0%0

F - P

rice

con

trol

mea

sure

s0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0

G -

Fina

nce

mea

sure

s0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0

I - In

vest

men

t mea

sure

s7.

8%14

.3%

14.3

%13

.7%

0.0%

0.0%

0.0%

0.0%

0.0%

0.0%

0

L - S

ubsi

dies

(exc

ept e

xpor

t sub

sidi

es)

0.0%

0.0%

0.0%

0.0%

0.0%

0.0%

0.0%

0.0%

0.0%

0.0%

0

M -

Gov

ernm

ent p

rocu

rem

ent

0.0%

0.0%

0.0%

0.0%

0.0%

0.0%

0.0%

13.3

%16

.1%

16.1

%1

Impo

rt ta

riff

mea

sure

s0.

1%0.

0%0.

0%0.

0%0.

0%0.

0%0.

6%13

.1%

13.1

%13

.1%

2

Inst

rum

ent u

ncla

ssifi

ed46

.1%

53.1

%53

.1%

53.1

%53

.1%

53.1

%53

.1%

53.1

%0.

0%0.

0%0

Not

e: S

ince

a tr

ade

flow

can

face

mor

e th

an o

ne tr

ade

dist

ortio

n th

en th

e st

atis

tics

for “

all i

nstr

umen

ts” m

ay b

e le

ss th

an th

e su

m o

f all

of th

e ro

ws

bene

ath

it.


JAPANJAPAN’S SHARE OF WORLD TRADE IN STEEL AND GLOBAL EXCESS CAPACITY

SUMMARY STATISTICS ON JAPAN’S GLOBAL MARKET SHARE OF STEEL PRODUCTION AND TRADE

Metric 2009 2010 2011 2012 2013 2014 2015 2016








SHAR

E O

F JA

PAN

’S S

TEEL

EXP

ORT

S FA

CIN

G C

RISI

S-ER

A TR

ADE

DIS

TORT

ION

S, O

VERA

LL A

ND

BY

CLAS

S O

F PO

LICY

INST

RUM

ENT

Polic

y in

stru

men

t20

0920

1020

1120

1220

1320

1420

1520

1620

1720

18N

umbe

r of

inte

rven

tion

s in

forc

e to

day

All i

nstr

umen

ts30

.3%

57.1

%61

.7%

62.9

%66

.2%

64.2

%63

.7%

70.4

%78

.4%

78.7

%17

4

D -

Cont

inge

nt tr

ade

prot

ecti

on2.

5%3.

8%4.

2%5.

7%6.

9%7.

4%7.

8%11

.1%

11.6

%12

.5%

53

E - N

on-a

utom

atic

lice

nsin

g, q

uota

s0.

0%0.

5%6.

6%6.

0%8.

4%9.

5%9.

1%10

.1%

10.1

%10

.1%

8

F - P

rice

con

trol

mea

sure

s0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%1

G -

Fina

nce

mea

sure

s0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0

I - In

vest

men

t mea

sure

s0.

2%0.

6%0.

6%0.

6%0.

2%3.

5%6.

0%6.

1%6.

1%6.

1%4

L - S

ubsi

dies

(exc

ept e

xpor

t sub

sidi

es)

0.4%

0.7%

0.8%

1.8%

3.6%

3.9%

4.9%

9.3%

17.6

%17

.6%

27

M -

Gov

ernm

ent p

rocu

rem

ent

5.2%

5.8%

5.9%

5.9%

5.9%

5.9%

6.2%

6.8%

7.8%

8.2%

52

P - E

xpor

t mea

sure

s25

.2%

53.4

%54

.0%

56.5

%59

.3%

57.4

%56

.7%

60.0

%61

.6%

61.6

%18

Impo

rt ta

riff

mea

sure

s0.

1%0.

1%0.

0%0.

0%0.

1%0.

1%0.

2%0.

3%0.

6%1.

3%8

Inst

rum

ent u

ncla

ssifi

ed1.

8%2.

6%2.

6%2.

5%2.

1%2.

1%2.

1%2.

6%0.

7%0.

7%3

SHAR

E O

F JA

PAN

’S S

TEEL

IMPO

RTS

FACI

NG

CRI

SIS-

ERA

TRAD

E D

ISTO

RTIO

NS

IMPO

SED

BY

JAPA

N, O

VERA

LL A

ND

BY

CLAS

S O

F PO

LICY

INST

RUM

ENT

Polic

y in

stru

men

t20

0920

1020

1120

1220

1320

1420

1520

1620

1720

18N

umbe

r of

inte

rven

tion

s in

forc

e to

day

All i

nstr

umen

ts0%

0%0%

0%0%

0%0%

0%0%

0.3%

1

D -

Cont

inge

nt tr

ade

prot

ecti

on0%

0%0%

0%0%

0%0%

0%0%

0.3%

1

E - N

on-a

utom

atic

lice

nsin

g, q

uota

s0%

0%0%

0%0%

0%0%

0%0%

0.0%

0

F - P

rice

con

trol

mea

sure

s0%

0%0%

0%0%

0%0%

0%0%

0.0%

0

G -

Fina

nce

mea

sure

s0%

0%0%

0%0%

0%0%

0%0%

0.0%

0

I - In

vest

men

t mea

sure

s0%

0%0%

0%0%

0%0%

0%0%

0.0%

0

L - S

ubsi

dies

(exc

ept e

xpor

t sub

sidi

es)

0%0%

0%0%

0%0%

0%0%

0%0.

0%0

M -

Gov

ernm

ent p

rocu

rem

ent

0%0%

0%0%

0%0%

0%0%

0%0.

0%0

Impo

rt ta

riff

mea

sure

s0%

0%0%

0%0%

0%0%

0%0%

0.0%

0

Inst

rum

ent u

ncla

ssifi

ed0%

0%0%

0%0%

0%0%

0%0%

0.0%

0

Not

e: S

ince

a tr

ade

flow

can

face

mor

e th

an o

ne tr

ade

dist

ortio

n th

en th

e st

atis

tics

for “

all i

nstr

umen

ts” m

ay b

e le

ss th

an th

e su

m o

f all

of th

e ro

ws

bene

ath

it.


MEXICOMEXICO’S SHARE OF WORLD TRADE IN STEEL AND GLOBAL EXCESS CAPACITY

SUMMARY STATISTICS ON MEXICO’S GLOBAL MARKET SHARE OF STEEL PRODUCTION AND TRADE

Metric 2009 2010 2011 2012 2013 2014 2015 2016








SHAR

E O

F M

EXIC

O’S

STE

EL E

XPO

RTS

FACI

NG

CRI

SIS-

ERA

TRAD

E D

ISTO

RTIO

NS,

OVE

RALL

AN

D B

Y CL

ASS

OF

POLI

CY IN

STRU

MEN

T

Polic

y in

stru

men

t20

0920

1020

1120

1220

1320

1420

1520

1620

1720

18N

umbe

r of

inte

rven

tion

s in

forc

e to

day

All i

nstr

umen

ts60

.6%

80.4

%80

.8%

82.7

%83

.3%

78.7

%78

.6%

79.7

%80

.6%

80.4

%10

8

D -

Cont

inge

nt tr

ade

prot

ecti

on0.

2%1.

6%1.

8%4.

3%6.

0%11

.1%

14.5

%34

.1%

37.6

%38

.0%

16

E - N

on-a

utom

atic

lice

nsin

g, q

uota

s0.

0%0.

0%0.

6%1.

3%1.

8%1.

7%1.

0%1.

2%1.

5%1.

5%5

F - P

rice

con

trol

mea

sure

s0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0

G -

Fina

nce

mea

sure

s0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0

I - In

vest

men

t mea

sure

s0.

0%0.

0%0.

0%0.

0%0.

0%34

.8%

61.9

%61

.9%

61.9

%61

.9%

1

L - S

ubsi

dies

(exc

ept e

xpor

t sub

sidi

es)

0.4%

6.9%

23.5

%38

.6%

58.1

%58

.1%

60.3

%60

.6%

60.6

%60

.6%

16

M -

Gov

ernm

ent p

rocu

rem

ent

54.1

%58

.1%

61.9

%61

.9%

62.1

%62

.2%

62.5

%62

.9%

63.1

%63

.1%

50

P - E

xpor

t mea

sure

s27

.3%

70.4

%71

.7%

73.9

%73

.8%

62.6

%50

.4%

69.0

%70

.9%

70.9

%15

Impo

rt ta

riff

mea

sure

s0.

1%0.

1%0.

0%0.

0%0.

1%0.

2%0.

7%0.

8%0.

5%0.

3%5

Inst

rum

ent u

ncla

ssifi

ed0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0

SHAR

E O

F M

EXIC

O’S

STE

EL IM

PORT

S FA

CIN

G C

RISI

S-ER

A TR

ADE

DIS

TORT

ION

S IM

POSE

D

BY M

EXIC

O, O

VERA

LL A

ND

BY

CLAS

S O

F PO

LICY

INST

RUM

ENT

Polic

y in

stru

men

t20

0920

1020

1120

1220

1320

1420

1520

1620

1720

18N

umbe

r of

inte

rven

tion

s in

forc

e to

day

All i

nstr

umen

ts0%

0%0.

1%0.

7%3.

7%35

.7%

38.8

%48

.9%

51.5

%48

.1%

24

D -

Cont

inge

nt tr

ade

prot

ecti

on0%

0%0.

1%0.

7%1.

2%2.

1%2.

3%2.

6%2.

9%3.

1%22

E - N

on-a

utom

atic

lice

nsin

g, q

uota

s0%

0%0.

0%0.

0%2.

6%35

.6%

38.6

%47

.6%

47.6

%47

.6%

2

F - P

rice

con

trol

mea

sure

s0%

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0

G -

Fina

nce

mea

sure

s0%

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0

I - In

vest

men

t mea

sure

s0%

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0

L - S

ubsi

dies

(exc

ept e

xpor

t sub

sidi

es)

0%0%

0.0%

0.0%

0.0%

0.0%

0.0%

0.0%

0.0%

0.0%

0

M -

Gov

ernm

ent p

rocu

rem

ent

0%0%

0.0%

0.0%

0.0%

0.0%

0.0%

0.0%

0.0%

0.0%

0

Impo

rt ta

riff

mea

sure

s0%

0%0.

0%0.

0%0.

0%0.

0%0.

2%6.

1%17

.4%

0.0%

0

Inst

rum

ent u

ncla

ssifi

ed0%

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0

Not

e: S

ince

a tr

ade

flow

can

face

mor

e th

an o

ne tr

ade

dist

ortio

n th

en th

e st

atis

tics

for “

all i

nstr

umen

ts” m

ay b

e le

ss th

an th

e su

m o

f all

of th

e ro

ws

bene

ath

it.


NORWAYNORWAY’S SHARE OF WORLD TRADE IN STEEL AND GLOBAL EXCESS CAPACITY

SUMMARY STATISTICS ON NORWAY’S GLOBAL MARKET SHARE OF STEEL PRODUCTION AND TRADE

Metric 2009 2010 2011 2012 2013 2014 2015 2016








SHAR

E O

F N

ORW

AY’S

STE

EL E

XPO

RTS

FACI

NG

CRI

SIS-

ERA

TRAD

E D

ISTO

RTIO

NS,

O

VERA

LL A

ND

BY

CLAS

S O

F PO

LICY

INST

RUM

ENT

Polic

y in

stru

men

t20

0920

1020

1120

1220

1320

1420

1520

1620

1720

18N

umbe

r of

inte

rven

tion

s in

forc

e to

day

All i

nstr

umen

ts9.

4%17

.0%

17.7

%19

.0%

19.9

%17

.6%

17.0

%17

.3%

18.1

%18

.1%

64

D -

Cont

inge

nt tr

ade

prot

ecti

on0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%1

E - N

on-a

utom

atic

lice

nsin

g, q

uota

s0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0

F - P

rice

con

trol

mea

sure

s0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0

G -

Fina

nce

mea

sure

s0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0

I - In

vest

men

t mea

sure

s0.

0%0.

1%0.

1%0.

1%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%1

L - S

ubsi

dies

(exc

ept e

xpor

t sub

sidi

es)

1.3%

5.5%

5.5%

5.5%

5.5%

5.7%

5.7%

5.7%

5.7%

5.7%

3

M -

Gov

ernm

ent p

rocu

rem

ent

2.5%

2.8%

2.8%

2.8%

2.8%

2.8%

3.1%

4.6%

4.9%

5.3%

46

P - E

xpor

t mea

sure

s5.

7%11

.0%

11.9

%13

.1%

13.9

%10

.7%

10.0

%10

.1%

10.9

%10

.9%

11

Impo

rt ta

riff

mea

sure

s0.

8%0.

6%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

1%2

Inst

rum

ent u

ncla

ssifi

ed0.

1%0.

1%0.

1%0.

1%0.

1%0.

1%0.

1%0.

1%0.

0%0.

0%0

SHAR

E O

F N

ORW

AY’S

STE

EL IM

PORT

S FA

CIN

G C

RISI

S-ER

A TR

ADE

DIS

TORT

ION

S IM

POSE

D

BY N

ORW

AY, O

VERA

LL A

ND

BY

CLAS

S O

F PO

LICY

INST

RUM

ENT

Polic

y in

stru

men

t20

0920

1020

1120

1220

1320

1420

1520

1620

1720

18N

umbe

r of

inte

rven

tion

s in

forc

e to

day

All i

nstr

umen

ts0%

0%0%

0%0%

0%0%

0%0%

0%0

D -

Cont

inge

nt tr

ade

prot

ecti

on0%

0%0%

0%0%

0%0%

0%0%

0%0

E - N

on-a

utom

atic

lice

nsin

g, q

uota

s0%

0%0%

0%0%

0%0%

0%0%

0%0

F - P

rice

con

trol

mea

sure

s0%

0%0%

0%0%

0%0%

0%0%

0%0

G -

Fina

nce

mea

sure

s0%

0%0%

0%0%

0%0%

0%0%

0%0

I - In

vest

men

t mea

sure

s0%

0%0%

0%0%

0%0%

0%0%

0%0

L - S

ubsi

dies

(exc

ept e

xpor

t sub

sidi

es)

0%0%

0%0%

0%0%

0%0%

0%0%

0

M -

Gov

ernm

ent p

rocu

rem

ent

0%0%

0%0%

0%0%

0%0%

0%0%

0

Impo

rt ta

riff

mea

sure

s0%

0%0%

0%0%

0%0%

0%0%

0%0

Inst

rum

ent u

ncla

ssifi

ed0%

0%0%

0%0%

0%0%

0%0%

0%0

Not

e: S

ince

a tr

ade

flow

can

face

mor

e th

an o

ne tr

ade

dist

ortio

n th

en th

e st

atis

tics

for “

all i

nstr

umen

ts” m

ay b

e le

ss th

an th

e su

m o

f all

of th

e ro

ws

bene

ath

it.


RUSSIARUSSIA’S SHARE OF WORLD TRADE IN STEEL AND GLOBAL EXCESS CAPACITY

SUMMARY STATISTICS ON RUSSIA’S GLOBAL MARKET SHARE OF STEEL PRODUCTION AND TRADE

Metric 2009 2010 2011 2012 2013 2014 2015 2016








SHAR

E O

F RU

SSIA

’S S

TEEL

EXP

ORT

S FA

CIN

G C

RISI

S-ER

A TR

ADE

DIS

TORT

ION

S, O

VERA

LL A

ND

BY

CLAS

S O

F PO

LICY

INST

RUM

ENT

Polic

y in

stru

men

t20

0920

1020

1120

1220

1320

1420

1520

1620

1720

18N

umbe

r of

inte

rven

tion

s in

forc

e to

day

All i

nstr

umen

ts26

.1%

49.5

%51

.3%

52.4

%52

.8%

48.1

%55

.1%

61.2

%63

.0%

63.1

%13

5

D -

Cont

inge

nt tr

ade

prot

ecti

on0.

3%1.

9%1.

9%2.

3%2.

7%3.

0%3.

2%7.

9%10

.7%

14.9

%28

E - N

on-a

utom

atic

lice

nsin

g, q

uota

s0.

0%0.

1%1.

6%1.

6%1.

6%2.

0%2.

0%12

.4%

17.4

%17

.4%

5

F - P

rice

con

trol

mea

sure

s0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0

G -

Fina

nce

mea

sure

s0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0

I - In

vest

men

t mea

sure

s0.

0%0.

1%0.

2%0.

2%0.

2%3.

4%5.

9%5.

9%5.

9%5.

9%4

L - S

ubsi

dies

(exc

ept e

xpor

t sub

sidi

es)

0.1%

5.4%

10.4

%11

.9%

12.4

%13

.1%

16.8

%23

.0%

23.5

%23

.5%

19

M -

Gov

ernm

ent p

rocu

rem

ent

6.2%

6.3%

7.7%

7.8%

7.8%

7.8%

8.5%

9.9%

11.8

%12

.5%

51

P - E

xpor

t mea

sure

s18

.9%

41.0

%42

.1%

43.5

%43

.7%

39.2

%39

.2%

43.2

%48

.4%

48.4

%16

Impo

rt ta

riff

mea

sure

s5.

2%9.

2%9.

1%9.

1%9.

1%9.

1%13

.0%

9.2%

9.2%

10.1

%11

Inst

rum

ent u

ncla

ssifi

ed0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%1.

8%2.

2%2.

2%1

SHAR

E O

F RU

SSIA

’S S

TEEL

IMPO

RTS

FACI

NG

CRI

SIS-

ERA

TRAD

E D

ISTO

RTIO

NS

IMPO

SED

BY

RU

SSIA

, OVE

RALL

AN

D B

Y CL

ASS

OF

POLI

CY IN

STRU

MEN

T

Polic

y in

stru

men

t20

0920

1020

1120

1220

1320

1420

1520

1620

1720

18N

umbe

r of

inte

rven

tion

s in

forc

e to

day

All i

nstr

umen

ts11

.8%

9.5%

6%13

.2%

23.4

%21

.5%

14.5

%44

.8%

47.4

%48

.7%

11

D -

Cont

inge

nt tr

ade

prot

ecti

on0.

1%0.

6%6%

8.8%

9.7%

8.4%

7.0%

10.0

%12

.6%

14.0

%7

E - N

on-a

utom

atic

lice

nsin

g, q

uota

s0.

0%0.

0%0%

7.2%

17.1

%15

.7%

0.0%

0.0%

0.0%

0.0%

0

F - P

rice

con

trol

mea

sure

s0.

0%0.

0%0%

0.0%

0.0%

0.0%

0.0%

0.0%

0.0%

0.0%

0

G -

Fina

nce

mea

sure

s0.

0%0.

0%0%

0.0%

0.0%

0.0%

0.0%

0.0%

0.0%

0.0%

0

I - In

vest

men

t mea

sure

s0.

0%0.

0%0%

0.0%

0.0%

0.0%

0.0%

0.0%

0.0%

0.0%

0

L - S

ubsi

dies

(exc

ept e

xpor

t sub

sidi

es)

0.0%

0.0%

0%0.

0%0.

0%0.

0%1.

4%30

.8%

30.8

%30

.8%

1

M -

Gov

ernm

ent p

rocu

rem

ent

0.0%

0.0%

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%1

Impo

rt ta

riff

mea

sure

s11

.8%

9.3%

0%0.

0%5.

7%5.

7%6.

3%6.

3%6.

3%6.

3%2

Inst

rum

ent u

ncla

ssifi

ed0.

0%0.

0%0%

0.0%

0.0%

0.0%

0.0%

0.0%

0.0%

0.0%

0

Not

e: S

ince

a tr

ade

flow

can

face

mor

e th

an o

ne tr

ade

dist

ortio

n th

en th

e st

atis

tics

for “

all i

nstr

umen

ts” m

ay b

e le

ss th

an th

e su

m o

f all

of th

e ro

ws

bene

ath

it.


SAUDI ARABIASAUDI ARABIA’S SHARE OF WORLD TRADE IN STEEL AND GLOBAL EXCESS CAPACITY

SUMMARY STATISTICS ON SAUDI ARABIA’S GLOBAL MARKET SHARE OF STEEL PRODUCTION AND TRADE

Metric 2009 2010 2011 2012 2013 2014 2015 2016








SHAR

E O

F SA

UD

I ARA

BIA’

S ST

EEL

EXPO

RTS

FACI

NG

CRI

SIS-

ERA

TRAD

E D

ISTO

RTIO

NS,

OVE

RALL

AN

D B

Y CL

ASS

OF

POLI

CY IN

STRU

MEN

T

Polic

y in

stru

men

t20

0920

1020

1120

1220

1320

1420

1520

1620

1720

18N

umbe

r of

inte

rven

tion

s in

forc

e to

day

All i

nstr

umen

ts16

.6%

28.1

%28

.2%

28.9

%34

.1%

34.5

%33

.9%

34.0

%34

.0%

34.0

%84

D -

Cont

inge

nt tr

ade

prot

ecti

on0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%6

E - N

on-a

utom

atic

lice

nsin

g, q

uota

s0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0

F - P

rice

con

trol

mea

sure

s0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0

G -

Fina

nce

mea

sure

s0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0

I - In

vest

men

t mea

sure

s0.

0%0.

0%0.

0%0.

0%0.

0%0.

3%0.

6%0.

6%0.

6%0.

6%1

L - S

ubsi

dies

(exc

ept e

xpor

t sub

sidi

es)

0.0%

0.0%

0.0%

0.2%

0.6%

0.7%

0.7%

1.7%

1.9%

1.9%

9

M -

Gov

ernm

ent p

rocu

rem

ent

0.5%

0.6%

0.6%

0.6%

0.6%

0.6%

0.6%

0.6%

0.6%

0.6%

48

P - E

xpor

t mea

sure

s16

.0%

27.7

%27

.8%

28.8

%34

.0%

34.4

%33

.9%

33.8

%33

.8%

33.8

%12

Impo

rt ta

riff

mea

sure

s0.

0%6.

1%6.

1%6.

1%6.

1%6.

1%6.

1%6.

1%6.

1%6.

2%8

Inst

rum

ent u

ncla

ssifi

ed0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0

SHAR

E O

F SA

UD

I ARA

BIA’

S ST

EEL

IMPO

RTS

FACI

NG

CRI

SIS-

ERA

TRAD

E D

ISTO

RTIO

NS

IMPO

SED

BY

SAU

DI A

RABI

A, O

VERA

LL A

ND

BY

CLAS

S O

F PO

LICY

INST

RUM

ENT

Polic

y in

stru

men

t20

0920

1020

1120

1220

1320

1420

1520

1620

1720

18N

umbe

r of

inte

rven

tion

s in

forc

e to

day

All i

nstr

umen

ts0%

5.6%

16.8

%16

.8%

17.2

%17

.8%

36.3

%36

.4%

36.4

%36

.4%

17

D -

Cont

inge

nt tr

ade

prot

ecti

on0%

0.0%

0.0%

0.0%

0.0%

0.0%

0.0%

0.0%

0.0%

0.0%

0

E - N

on-a

utom

atic

lice

nsin

g, q

uota

s0%

0.0%

0.0%

0.0%

0.0%

0.0%

0.0%

0.0%

0.0%

0.0%

0

F - P

rice

con

trol

mea

sure

s0%

0.0%

0.0%

0.0%

0.0%

0.0%

0.0%

0.0%

0.0%

0.0%

0

G -

Fina

nce

mea

sure

s0%

0.0%

0.0%

0.0%

0.0%

0.0%

0.0%

0.0%

0.0%

0.0%

0

I - In

vest

men

t mea

sure

s0%

0.0%

0.0%

0.0%

0.0%

0.0%

0.0%

0.0%

0.0%

0.0%

0

L - S

ubsi

dies

(exc

ept e

xpor

t sub

sidi

es)

0%5.

5%16

.8%

16.8

%17

.1%

17.8

%36

.3%

36.4

%36

.4%

36.4

%15

M -

Gov

ernm

ent p

rocu

rem

ent

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0

Impo

rt ta

riff

mea

sure

s0%

1.0%

0.4%

0.4%

0.4%

0.4%

0.4%

0.4%

0.4%

0.4%

2

Inst

rum

ent u

ncla

ssifi

ed0%

0.0%

0.0%

0.0%

0.0%

0.0%

0.0%

0.0%

0.0%

0.0%

0

Not

e: S

ince

a tr

ade

flow

can

face

mor

e th

an o

ne tr

ade

dist

ortio

n th

en th

e st

atis

tics

for “

all i

nstr

umen

ts” m

ay b

e le

ss th

an th

e su

m o

f all

of th

e ro

ws

bene

ath

it.


SOUTH AFRICASOUTH AFRICA’S SHARE OF WORLD TRADE IN STEEL AND GLOBAL EXCESS CAPACITY

SUMMARY STATISTICS ON SOUTH AFRICA’S GLOBAL MARKET SHARE OF STEEL PRODUCTION AND TRADE

Metric 2009 2010 2011 2012 2013 2014 2015 2016








SHAR

E O

F SO

UTH

AFR

ICA’

S ST

EEL

EXPO

RTS

FACI

NG

CRI

SIS-

ERA

TRAD

E D

ISTO

RTIO

NS,

OVE

RALL

AN

D B

Y CL

ASS

OF

POLI

CY IN

STRU

MEN

T

Polic

y in

stru

men

t20

0920

1020

1120

1220

1320

1420

1520

1620

1720

18N

umbe

r of

inte

rven

tion

s in

forc

e to

day

All i

nstr

umen

ts21

.0%

51.0

%58

.6%

60.6

%55

.2%

55.6

%51

.8%

54.8

%56

.3%

56.2

%13

3

D -

Cont

inge

nt tr

ade

prot

ecti

on0.

7%1.

0%1.

2%1.

3%1.

3%1.

0%1.

0%5.

0%6.

0%6.

7%13

E - N

on-a

utom

atic

lice

nsin

g, q

uota

s0.

0%0.

2%7.

2%7.

3%7.

4%7.

4%7.

4%14

.9%

18.5

%18

.5%

4

F - P

rice

con

trol

mea

sure

s0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0

G -

Fina

nce

mea

sure

s0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0

I - In

vest

men

t mea

sure

s0.

0%0.

8%1.

2%1.

2%1.

1%4.

1%6.

3%6.

3%6.

3%6.

3%3

L - S

ubsi

dies

(exc

ept e

xpor

t sub

sidi

es)

0.2%

0.8%

0.8%

3.1%

6.1%

6.9%

10.5

%13

.2%

13.6

%13

.6%

17

M -

Gov

ernm

ent p

rocu

rem

ent

3.8%

4.8%

6.4%

6.8%

6.8%

6.9%

7.5%

9.1%

9.2%

9.4%

51

P - E

xpor

t mea

sure

s16

.4%

34.9

%39

.0%

44.6

%47

.7%

43.6

%35

.2%

36.9

%38

.0%

38.0

%15

Impo

rt ta

riff

mea

sure

s1.

4%5.

3%7.

0%7.

3%7.

9%8.

7%10

.8%

12.2

%12

.3%

13.2

%29

Inst

rum

ent u

ncla

ssifi

ed0.

6%13

.2%

13.2

%12

.6%

0.0%

0.0%

0.0%

0.9%

1.0%

1.0%

1

SHAR

E O

F SO

UTH

AFR

ICA’

S ST

EEL

IMPO

RTS

FACI

NG

CRI

SIS-

ERA

TRAD

E D

ISTO

RTIO

NS

IMPO

SED

BY

SOU

TH A

FRIC

A, O

VERA

LL A

ND

BY

CLAS

S O

F PO

LICY

INST

RUM

ENT

Polic

y in

stru

men

t20

0920

1020

1120

1220

1320

1420

1520

1620

1720

18N

umbe

r of

inte

rven

tion

s in

forc

e to

day

All i

nstr

umen

ts0%

0%0%

0%0%

0.2%

3.7%

14.7

%30

.2%

38.9

%15

D -

Cont

inge

nt tr

ade

prot

ecti

on0%

0%0%

0%0%

0.0%

0.0%

0.0%

2.4%

6.2%

1

E - N

on-a

utom

atic

lice

nsin

g, q

uota

s0%

0%0%

0%0%

0.0%

0.0%

0.0%

0.0%

0.0%

0

F - P

rice

con

trol

mea

sure

s0%

0%0%

0%0%

0.0%

0.0%

0.0%

0.0%

0.0%

0

G -

Fina

nce

mea

sure

s0%

0%0%

0%0%

0.0%

0.0%

0.0%

0.0%

0.0%

0

I - In

vest

men

t mea

sure

s0%

0%0%

0%0%

0.0%

0.0%

0.0%

0.0%

0.0%

0

L - S

ubsi

dies

(exc

ept e

xpor

t sub

sidi

es)

0%0%

0%0%

0%0.

0%0.

0%0.

0%0.

0%0.

0%0

M -

Gov

ernm

ent p

rocu

rem

ent

0%0%

0%0%

0%0.

0%0.

0%0.

0%15

.0%

20.1

%2

Impo

rt ta

riff

mea

sure

s0%

0%0%

0%0%

0.2%

3.7%

14.7

%17

.3%

18.2

%12

Inst

rum

ent u

ncla

ssifi

ed0%

0%0%

0%0%

0.0%

0.0%

0.0%

0.0%

0.0%

0

Not

e: S

ince

a tr

ade

flow

can

face

mor

e th

an o

ne tr

ade

dist

ortio

n th

en th

e st

atis

tics

for “

all i

nstr

umen

ts” m

ay b

e le

ss th

an th

e su

m o

f all

of th

e ro

ws

bene

ath

it.


SOUTH KOREASOUTH KOREA’S SHARE OF WORLD TRADE IN STEEL AND GLOBAL EXCESS CAPACITY

SUMMARY STATISTICS ON SOUTH KOREA’S GLOBAL MARKET SHARE OF STEEL PRODUCTION AND TRADE

Metric 2009 2010 2011 2012 2013 2014 2015 2016








SHAR

E O

F SO

UTH

KO

REA’

S ST

EEL

EXPO

RTS

FACI

NG

CRI

SIS-

ERA

TRAD

E D

ISTO

RTIO

NS,

OVE

RALL

AN

D B

Y CL

ASS

OF

POLI

CY IN

STRU

MEN

T

Polic

y in

stru

men

t20

0920

1020

1120

1220

1320

1420

1520

1620

1720

18N

umbe

r of

inte

rven

tion

s in

forc

e to

day

All i

nstr

umen

ts28

.5%

52.5

%57

.1%

59.3

%63

.4%

62.3

%61

.2%

67.6

%76

.0%

76.2

%23

2

D -

Cont

inge

nt tr

ade

prot

ecti

on0.

7%1.

0%1.

3%3.

6%5.

0%6.

8%7.

9%14

.3%

17.1

%18

.4%

98

E - N

on-a

utom

atic

lice

nsin

g, q

uota

s0.

0%0.

2%10

.1%

9.9%

11.7

%12

.4%

12.2

%16

.7%

18.5

%18

.5%

8

F - P

rice

con

trol

mea

sure

s0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0

G -

Fina

nce

mea

sure

s0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0

I - In

vest

men

t mea

sure

s0.

1%0.

2%0.

2%0.

2%0.

0%6.

0%10

.7%

10.9

%11

.0%

11.0

%2

L - S

ubsi

dies

(exc

ept e

xpor

t sub

sidi

es)

0.1%

1.4%

2.6%

7.5%

11.7

%11

.9%

14.4

%22

.2%

32.2

%32

.2%

37

M -

Gov

ernm

ent p

rocu

rem

ent

9.6%

11.1

%11

.1%

11.1

%11

.1%

11.1

%12

.5%

13.5

%15

.8%

16.9

%52

P - E

xpor

t mea

sure

s20

.5%

46.7

%47

.4%

50.3

%53

.2%

49.7

%47

.0%

51.2

%51

.8%

51.8

%16

Impo

rt ta

riff

mea

sure

s0.

1%0.

1%0.

1%0.

1%0.

1%0.

1%0.

2%0.

3%0.

6%2.

3%17

Inst

rum

ent u

ncla

ssifi

ed1.

4%3.

5%3.

5%3.

5%1.

5%1.

5%1.

5%3.

5%2.

5%2.

5%2

SHAR

E O

F SO

UTH

KO

REA’

S ST

EEL

IMPO

RTS

FACI

NG

CRI

SIS-

ERA

TRAD

E D

ISTO

RTIO

NS

IMPO

SED

BY

SOU

TH K

ORE

A, O

VERA

LL A

ND

BY

CLAS

S O

F PO

LICY

INST

RUM

ENT

Polic

y in

stru

men

t20

0920

1020

1120

1220

1320

1420

1520

1620

1720

18N

umbe

r of

inte

rven

tion

s in

forc

e to

day

All i

nstr

umen

ts0%

0%1.

3%0.

5%0.

5%0.

7%1.

6%2.

8%2.

8%2.

8%3

D -

Cont

inge

nt tr

ade

prot

ecti

on0%

0%0.

3%0.

5%0.

5%0.

7%1.

6%2.

8%2.

8%2.

8%3

E - N

on-a

utom

atic

lice

nsin

g, q

uota

s0%

0%1.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0

F - P

rice

con

trol

mea

sure

s0%

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0

G -

Fina

nce

mea

sure

s0%

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0

I - In

vest

men

t mea

sure

s0%

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0

L - S

ubsi

dies

(exc

ept e

xpor

t sub

sidi

es)

0%0%

0.0%

0.0%

0.0%

0.0%

0.0%

0.0%

0.0%

0.0%

0

M -

Gov

ernm

ent p

rocu

rem

ent

0%0%

0.0%

0.0%

0.0%

0.0%

0.0%

0.0%

0.0%

0.0%

0

Impo

rt ta

riff

mea

sure

s0%

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0

Inst

rum

ent u

ncla

ssifi

ed0%

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0

Not

e: S

ince

a tr

ade

flow

can

face

mor

e th

an o

ne tr

ade

dist

ortio

n th

en th

e st

atis

tics

for “

all i

nstr

umen

ts” m

ay b

e le

ss th

an th

e su

m o

f all

of th

e ro

ws

bene

ath

it.


SWITZERLANDSWITZERLAND’S SHARE OF WORLD TRADE IN STEEL AND GLOBAL EXCESS CAPACITY

SUMMARY STATISTICS ON SWITZERLAND’S GLOBAL MARKET SHARE OF STEEL PRODUCTION AND TRADE

Metric 2009 2010 2011 2012 2013 2014 2015 2016








SHAR

E O

F SW

ITZE

RLAN

D’S

STE

EL E

XPO

RTS

FACI

NG

CRI

SIS-

ERA

TRAD

E D

ISTO

RTIO

NS,

OVE

RALL

AN

D B

Y CL

ASS

OF

POLI

CY IN

STRU

MEN

T

Polic

y in

stru

men

t20

0920

1020

1120

1220

1320

1420

1520

1620

1720

18N

umbe

r of

inte

rven

tion

s in

forc

e to

day

All i

nstr

umen

ts25

.5%

52.9

%57

.8%

60.1

%63

.3%

63.4

%60

.1%

73.0

%74

.3%

74.3

%74

D -

Cont

inge

nt tr

ade

prot

ecti

on0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%1.

4%1.

7%1.

7%5

E - N

on-a

utom

atic

lice

nsin

g, q

uota

s0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%1

F - P

rice

con

trol

mea

sure

s0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0

G -

Fina

nce

mea

sure

s0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0

I - In

vest

men

t mea

sure

s0.

0%0.

0%0.

0%0.

0%0.

0%1.

4%2.

4%2.

4%2.

4%2.

4%1

L - S

ubsi

dies

(exc

ept e

xpor

t sub

sidi

es)

1.0%

18.5

%24

.9%

25.3

%26

.1%

42.2

%44

.8%

58.6

%61

.3%

61.3

%4

M -

Gov

ernm

ent p

rocu

rem

ent

2.3%

2.7%

2.8%

2.8%

2.8%

2.8%

3.0%

3.9%

3.9%

3.9%

47

P - E

xpor

t mea

sure

s23

.9%

38.6

%38

.2%

42.4

%48

.2%

47.7

%39

.5%

46.6

%48

.2%

48.2

%14

Impo

rt ta

riff

mea

sure

s0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

5%1

Inst

rum

ent u

ncla

ssifi

ed0.

0%1.

1%1.

1%1.

1%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%1

SHAR

E O

F SW

ITZE

RLAN

D’S

STE

EL IM

PORT

S FA

CIN

G C

RISI

S-ER

A TR

ADE

DIS

TORT

ION

S IM

POSE

D B

Y SW

ITZE

RLAN

D, O

VERA

LL A

ND

BY

CLAS

S O

F PO

LICY

INST

RUM

ENT

Polic

y in

stru

men

t20

0920

1020

1120

1220

1320

1420

1520

1620

1720

18N

umbe

r of

inte

rven

tion

s in

forc

e to

day

All i

nstr

umen

ts0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0

D -

Cont

inge

nt tr

ade

prot

ecti

on0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0

E - N

on-a

utom

atic

lice

nsin

g, q

uota

s0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0

F - P

rice

con

trol

mea

sure

s0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0

G -

Fina

nce

mea

sure

s0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0

I - In

vest

men

t mea

sure

s0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0

L - S

ubsi

dies

(exc

ept e

xpor

t sub

sidi

es)

0.0%

0.0%

0.0%

0.0%

0.0%

0.0%

0.0%

0.0%

0.0%

0.0%

0

M -

Gov

ernm

ent p

rocu

rem

ent

0.0%

0.0%

0.0%

0.0%

0.0%

0.0%

0.0%

0.0%

0.0%

0.0%

0

Impo

rt ta

riff

mea

sure

s0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0

Inst

rum

ent u

ncla

ssifi

ed0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0

Not

e: S

ince

a tr

ade

flow

can

face

mor

e th

an o

ne tr

ade

dist

ortio

n th

en th

e st

atis

tics

for “

all i

nstr

umen

ts” m

ay b

e le

ss th

an th

e su

m o

f all

of th

e ro

ws

bene

ath

it.


TURKEYTURKEY’S SHARE OF WORLD TRADE IN STEEL AND GLOBAL EXCESS CAPACITY

SUMMARY STATISTICS ON TURKEY’S GLOBAL MARKET SHARE OF STEEL PRODUCTION AND TRADE

Metric 2009 2010 2011 2012 2013 2014 2015 2016








SHAR

E O

F TU

RKEY

’S S

TEEL

EXP

ORT

S FA

CIN

G C

RISI

S-ER

A TR

ADE

DIS

TORT

ION

S, O

VERA

LL A

ND

BY

CLAS

S O

F PO

LICY

INST

RUM

ENT

Polic

y in

stru

men

t20

0920

1020

1120

1220

1320

1420

1520

1620

1720

18N

umbe

r of

inte

rven

tion

s in

forc

e to

day

All i

nstr

umen

ts23

.3%

34.0

%36

.2%

37.4

%37

.4%

35.7

%35

.8%

46.0

%50

.8%

50.9

%13

5

D -

Cont

inge

nt tr

ade

prot

ecti

on8.

2%7.

9%8.

8%8.

8%8.

8%13

.5%

15.9

%17

.7%

18.3

%19

.6%

37

E - N

on-a

utom

atic

lice

nsin

g, q

uota

s0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%15

.9%

23.6

%23

.6%

3

F - P

rice

con

trol

mea

sure

s0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0

G -

Fina

nce

mea

sure

s0.

9%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0

I - In

vest

men

t mea

sure

s0.

0%0.

0%0.

0%0.

0%0.

0%5.

9%10

.5%

10.5

%10

.5%

10.5

%3

L - S

ubsi

dies

(exc

ept e

xpor

t sub

sidi

es)

3.1%

4.3%

2.5%

5.3%

10.6

%11

.4%

13.9

%18

.8%

19.5

%19

.5%

23

M -

Gov

ernm

ent p

rocu

rem

ent

7.0%

8.6%

10.4

%10

.5%

10.5

%10

.5%

12.1

%14

.7%

14.7

%14

.7%

50

P - E

xpor

t mea

sure

s11

.0%

24.9

%25

.2%

26.2

%26

.9%

23.0

%22

.8%

30.2

%34

.2%

34.2

%16

Impo

rt ta

riff

mea

sure

s0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

1%0.

0%0.

0%2.

1%3

Inst

rum

ent u

ncla

ssifi

ed0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0

SHAR

E O

F TU

RKEY

’S S

TEEL

IMPO

RTS

FACI

NG

CRI

SIS-

ERA

TRAD

E D

ISTO

RTIO

NS

IMPO

SED

BY

TU

RKEY

, OVE

RALL

AN

D B

Y CL

ASS

OF

POLI

CY IN

STRU

MEN

T

Polic

y in

stru

men

t20

0920

1020

1120

1220

1320

1420

1520

1620

1720

18N

umbe

r of

inte

rven

tion

s in

forc

e to

day

All i

nstr

umen

ts21

.1%

26.8

%26

.8%

26.8

%27

.7%

29.4

%30

.1%

37.1

%37

.4%

40.8

%20

D -

Cont

inge

nt tr

ade

prot

ecti

on0.

0%0.

1%0.

1%0.

1%0.

2%0.

3%2.

9%1.

7%1.

2%7.

1%6

E - N

on-a

utom

atic

lice

nsin

g, q

uota

s0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0

F - P

rice

con

trol

mea

sure

s0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0

G -

Fina

nce

mea

sure

s0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0

I - In

vest

men

t mea

sure

s0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0

L - S

ubsi

dies

(exc

ept e

xpor

t sub

sidi

es)

0.0%

0.0%

0.0%

0.0%

0.0%

0.0%

0.0%

0.0%

0.0%

0.0%

0

M -

Gov

ernm

ent p

rocu

rem

ent

0.0%

0.0%

0.0%

0.0%

0.0%

0.0%

0.0%

0.0%

0.0%

0.2%

1

Impo

rt ta

riff

mea

sure

s21

.1%

26.8

%26

.8%

26.8

%27

.4%

29.1

%29

.5%

36.5

%36

.5%

36.5

%13

Inst

rum

ent u

ncla

ssifi

ed0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0

Not

e: S

ince

a tr

ade

flow

can

face

mor

e th

an o

ne tr

ade

dist

ortio

n th

en th

e st

atis

tics

for “

all i

nstr

umen

ts” m

ay b

e le

ss th

an th

e su

m o

f all

of th

e ro

ws

bene

ath

it.


UNITED STATESTHE US’ SHARE OF WORLD TRADE IN STEEL AND GLOBAL EXCESS CAPACITY

SUMMARY STATISTICS ON THE US’ GLOBAL MARKET SHARE OF STEEL PRODUCTION AND TRADE

Metric 2009 2010 2011 2012 2013 2014 2015 2016








SHAR

E O

F TH

E U

S’ S

TEEL

EXP

ORT

S FA

CIN

G C

RISI

S-ER

A TR

ADE

DIS

TORT

ION

S, O

VERA

LL A

ND

BY

CLAS

S O

F PO

LICY

INST

RUM

ENT

Polic

y in

stru

men

t20

0920

1020

1120

1220

1320

1420

1520

1620

1720

18N

umbe

r of

inte

rven

tion

s in

forc

e to

day

All i

nstr

umen

ts23

.1%

50.6

%55

.5%

57.7

%59

.3%

62.2

%80

.3%

83.8

%85

.2%

85.3

%85

D -

Cont

inge

nt tr

ade

prot

ecti

on0.

5%3.

3%3.

3%3.

3%3.

3%4.

4%4.

6%4.

7%10

.4%

40.1

%15

E - N

on-a

utom

atic

lice

nsin

g, q

uota

s0.

1%0.

1%1.

5%1.

7%2.

6%11

.8%

12.4

%18

.3%

19.9

%20

.0%

9

F - P

rice

con

trol

mea

sure

s0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0

G -

Fina

nce

mea

sure

s0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0

I - In

vest

men

t mea

sure

s0.

1%0.

4%0.

5%0.

4%0.

2%0.

2%0.

2%0.

2%0.

2%0.

2%4

L - S

ubsi

dies

(exc

ept e

xpor

t sub

sidi

es)

0.8%

2.0%

2.3%

5.4%

5.4%

6.2%

31.8

%39

.4%

39.9

%39

.9%

25

M -

Gov

ernm

ent p

rocu

rem

ent

0.0%

0.0%

0.0%

0.0%

0.0%

0.0%

30.1

%32

.1%

32.6

%32

.8%

4

P - E

xpor

t mea

sure

s22

.1%

45.6

%50

.3%

53.0

%55

.9%

55.8

%55

.8%

63.3

%64

.4%

64.4

%18

Impo

rt ta

riff

mea

sure

s0.

0%0.

0%0.

0%0.

0%0.

0%1.

1%1.

7%3.

1%6.

3%1.

6%9

Inst

rum

ent u

ncla

ssifi

ed0.

3%2.

3%2.

3%2.

2%0.

2%0.

2%0.

2%0.

7%0.

6%0.

6%1

SHAR

E O

F TH

E U

S’ S

TEEL

IMPO

RTS

FACI

NG

CRI

SIS-

ERA

TRAD

E D

ISTO

RTIO

NS

IMPO

SED

BY

TH

E U

, OVE

RALL

AN

D B

Y CL

ASS

OF

POLI

CY IN

STRU

MEN

T

Polic

y in

stru

men

t20

0920

1020

1120

1220

1320

1420

1520

1620

1720

18N

umbe

r of

inte

rven

tion

s in

forc

e to

day

All i

nstr

umen

ts80

.2%

90.0

%93

.2%

94.8

%95

.3%

95.6

%95

.9%

96.6

%96

.7%

96.8

%14

4

D -

Cont

inge

nt tr

ade

prot

ecti

on2.

0%4.

1%5.

2%8.

0%9.

1%14

.5%

17.6

%52

.1%

59.1

%62

.5%

89

E - N

on-a

utom

atic

lice

nsin

g, q

uota

s0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0

F - P

rice

con

trol

mea

sure

s0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0

G -

Fina

nce

mea

sure

s0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0

I - In

vest

men

t mea

sure

s0.

0%0.

0%0.

0%0.

0%0.

0%47

.5%

84.6

%84

.6%

84.6

%84

.6%

1

L - S

ubsi

dies

(exc

ept e

xpor

t sub

sidi

es)

0.0%

0.8%

10.2

%33

.8%

63.0

%63

.7%

63.8

%63

.9%

63.9

%63

.9%

5

M -

Gov

ernm

ent p

rocu

rem

ent

80.1

%90

.0%

93.1

%94

.4%

95.0

%95

.3%

95.4

%96

.3%

96.4

%96

.5%

48

Impo

rt ta

riff

mea

sure

s0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%10

.4%

1

Inst

rum

ent u

ncla

ssifi

ed0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0.

0%0

Not

e: S

ince

a tr

ade

flow

can

face

mor

e th

an o

ne tr

ade

dist

ortio

n th

en th

e st

atis

tics

for “

all i

nstr

umen

ts” m

ay b

e le

ss th

an th

e su

m o

f all

of th

e ro

ws

bene

ath

it.

101 | Global Trade Alert

During the past year some of America’s trading partners have sought to rein in Washington’s unilateral protectionist instincts by framing the woes of the trading system in terms of global excess capacity—essentially diplomatic code for Chinese excess capacity in manufactures. The joint EU, Japanese, and US statement pledging cooperation on such matters at last December’s WTO Ministerial Conference was an important milestone in this co-option strategy. In light of the threatened imposition of tariffs on steel and aluminium products on widely-derided national security grounds, this report examines whether America’s trading partners should double down on this particular strategy. To do so, we evaluate whether excess capacity in manufactured goods is a systemic threat to the world trading system.

We conclude there is no compelling case for governments going spare over global excess capacity in manufacturing. From the perspective of the global trading system, a nation’s excess production capacity is not the issue per se but the harm such excess capacity does to trading partners is. We build our case first by critically evaluating the implementation of the only G20 initiative to tackle sectoral excess capacity, namely in the steel sector. The dissatisfaction of key steel sector stakeholders with this initiative’s execution is merited. That the steel sector is plagued by trade distortions is not in question, how the G20 has gone about tackling it is.

Then we muster empirical evidence that sheds light on how little global trade is in sectors where China has excess capacity. Moreover, exports from these sectors account for only a small share of China’s total exports. Critically we show how systemically unimportant are the trade-related knock-on effects of excess capacity such as import surges and how infrequently G20 governments have bothered to respond to import surges in excess capacity sectors during the past 10 years.

On examination, it turns out that the phrase excess capacity is slippery—rhetorically useful, but hard to pin down, even harder to operationalise, and at the same time woefully misleading. So excess capacity joins the list of superficially appealing trade policy jargon such as unfair trade and managed trade. A focus on excess capacity in some manufacturing sectors ignores the trade policy challenges building up in other sectors of the world economy. Framing future trade cooperation in terms of global excess capacity isn’t the way forward. The focus should be on the altering policies that distort commerce not targeting market outcomes, of which excess capacity is one.

CEPR PressCentre for Economic Policy Research33 Great Sutton StreetLondon EC1V 0DX

Tel: +44 (0) 20 7183 8801Fax: +44 (0)20 7183 8820Email: [email protected]: www.cepr.org