China, West trade blame over steel crisis at OECD talks

China and the West traded blame Monday over the crisis plaguing the global steel sector, as the world's top-producing countries met in Brussels amid efforts to keep their industries from buckling under the pressure of overproduction.

The steel sector is manufacturing more than the global economy can absorb, driving down prices and leading to job cuts. China has been accused of exacerbating the problem with unfairly cheap exports and subsidies that encourage its steel sector to grow despite the lack of demand.

"It's now life or death for many companies," EU Trade Commissioner Cecilia Malmstrom warned at Monday's talks, which were convened by the Organization for Economic Co-Operation and Development (OECD) and labelled as a high-level symposium.

China is not a member of the OECD, but attended at the invitation of the host Belgium, assistant minister Zhang Ji said. The meeting featured "very frank" discussions, Belgian Deputy Prime Minister Kris Peeters said.

Zhang squarely rejected the criticism aimed at his country, denying that Beijing uses subsidies and criticizing the trade measures implemented by many countries to curb Chinese exports. He also said his country has undertaken difficult measures to cut its overproduction, calling on others to do the same.

Global issues take "collective courage" to face up to and "concerted efforts to address." Blaming each other does not help to resolve problems, he said during the conference, according to the text of his speech.

He later told journalists in Brussels that China only exports 14 per cent of the steel it produces and that the "fundamental reason" behind the steel overcapacity is slow economic growth due to financial crises.

But the United States and the European Union both singled out China's actions as playing a key role in the crisis.

"China's steel capacity has greatly exceeded its domestic demand, with the gap between capacity and demand growing to an estimated 400 million net tons in 2015, which is over three times larger than the total capacity of the US," said that country's deputy trade representative, Robert Holleyman.

"The massive surge in steel imports from China is hitting Europe very hard and the price of steel in Europe has dropped by 40 per cent the last years," Malmstrom noted. "One crucial problem here is of course the involvement of states and support, and not market needs, and this has created incentives to overproduce."

The EU has imposed a range of anti-dumping measures against China. Malmstrom said the EU is "examining a few other Chinese issues as well and we might bring them further later this year."

"We don't mind competition in the EU, but it has to be fair," she added.

The 28-country bloc is the second-largest steel producer in the world, generating more than 177 million tons every year and employing more than 320,000 people.

The steel sector also plays an important role as a supplier to other industries, such as the automobile sector.

"The steel industry is not just any industry," European Commission President Jean-Claude Juncker last week told the European Parliament. "These jobs have to be preserved in Europe. This is our urgent duty."

Monday's OECD meeting was attended by officials from 34 countries, representing 93 per cent of the world's steel production. The talks had, among other things, been meant to "reduce trade frictions among trading partners."

OECD Deputy Secretary General Mari Kiviniemi said it was a "very big step already to discuss these issues," while also acknowledging that "some of the countries would have wanted to take more concrete steps."

"But I want to underline that this is a very complex situation and the solutions are not simple ones," she said.

Another high-level meeting could be held later this year, Kiviniemi added, while also underlining the need for "moving very quickly ... because the crisis is on right now."

"Common solutions are so much better than cut-throat competition between different countries," Peeters said. "There are no winners in trade wars."

Last update: Fri, 24/06/2016 - 08:49

More from World

MSF: 25 bodies recovered off Libya, 246 migrants rescued

Twenty-five bodies have been recovered and 246 people saved in Mediterranean Sea rescue operations, the medical...

Iran's Revolutionary Guard unveil new "suicide" drones: report

Iran's Revolutionary Guard unveiled a new drone, which can also be used for kamikaze-style attacks, the Tasnim news...

World Heritage Committee adopts controversial Jerusalem resolution

UNESCO's World Heritage Committee on Wednesday voted to approve a resolution criticized by Israel as ignoring Jewish...

Duterte wants US troops to leave Philippines in two years

Philippine President Rodrigo Duterte said on Wednesday he wants the withdrawal of all foreign troops from his...

UNICEF: South Sudan armed groups release 145 child soldiers

About 145 child soldiers were released Wednesday by armed groups in South Sudan, the UN children's fund UNICEF said...