THE WORLD IS AWASH IN EXCESS STEEL CAPACITY. NOBODY WANTS TO ACT ALONE.

tonnes of excess capacity, equal to almost double the combined annual steel production of all of North America, Japan and the EU.

That 700-mmt world steel capacity/production gap has grown from 542 mmt in 2012, the year the European Commission launched its “Action Plan” for a competitive steel industry.

Since then, the OECD has been at the forefront of attempts to resolve the growing capacity problem. Two years ago the OECD, at a “high-level meeting” on the issue, warned that “the global steel industry is currently in the midst of a serious crisis that is leading to considerable trade disturbances and escalating tensions between trading partners.”

As demand declined, world steel exports continued to rise. In response, said the OECD, governments have “resorted to measures including import duty increases, government subsidies and other support measures, export incentives, trade finance, investment measures, import quotas, minimum import prices, and surveillance mechanisms. While these support measures might provide temporary relief, they do not provide long-lasting solutions to help the industry and can lead to further trade tensions between steel trading partners.”

In early 2016, the European Commission ordered Belgium to recover 211 million euros in “illegal state aid” that artificially boosted revenues of local steelmakers and had the effect of postponed capacity-reduction in the Walloon steel industry. The Belgium crackdown was a warning to other nations, although how much state aid for steel remains buried in EU economic policy is unknown.

At the G20, following summits in China and Hamburg, a group called the Global Forum on Steel Excess Capacity was established. In a November 2017 report, through 50 pages of trade bureaucratese, the forum outlined a slew of proposed measures and “voluntary commitments” to reduce capacity and stop subsidies and other programs.

The G20, in effect, has no power to do anything. In future, the Global Forum “will meet three times a year to further discuss, assess and review” the situation. The priority through 2018, when further meetings are planned in connection with the G20 Summit in Argentina, steel forum members “should swiftly and fully apply the agreed principles and recommendations.”

In Ottawa, a House of Commons trade committee report last June warned that Canada’s steel industry can compete globally, but only on a “level playing field.” The committee said that the global excess steelmaking capacity and the resulting dumping of foreign products into Canada have hurt Canadian steel producers. It is difficult, if not impossible, for Canadian steel producers to compete with companies exporting their products to Canada at prices that do not reflect market forces. For these reasons, the Committee notes the importance of an effective, fair and accessible trade remedy system for all stakeholders in the Canadian steel industry.”

The world is awash in excess steel capacity and the global market is being flooded with surplus production. Nobody wants to act alone. China claims to be working to reduce its capacity. The EU has warned Trump not to raise tariffs — after it raised duties on steel from Brazil, Iran, Russia and Ukraine.

What Trump may have done, to the horror of free-trade purists but for the benefit of all, is raise the global steel crisis from its mired position within the EU/OECD/G20 machinery and brought it to the attention of the outside world.