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Statement by U.S. Secretary of Commerce Penny Pritzker and U.S. Trade Representative Michael Froman Following the Conclusion of the High-Level Meeting on Excess Capacity and Structural Adjustment in the Steel Sector

Washington, D.C. – U.S. Secretary of Commerce Penny Pritzker and U.S. Trade Representative Michael Froman issued the following statement after the conclusion of the high-level meeting in Brussels, Belgium on excess capacity and structural adjustment in the steel sector.

“The steel market is in a state of crisis resulting, primarily, from massive global excess capacity, much of which has stemmed from trade distortive government policies and actions. In an effort to address this situation, this week ministers, vice ministers and senior level officials from all over the world – including the United States – traveled to Brussels for the OECD High-Level Meeting on Excess Capacity and Structural Adjustment in the Steel Sector.  Most of these countries – many of them major steel producers – share the view that excess capacity, and government measures that give rise to it, underlie the current crisis.  These countries came to Brussels prepared to deal seriously with these issues. Unfortunately, other countries – China, among them – were not prepared to do so, preventing broad consensus.

“With the largest amount of excess capacity in the world, larger than the rest of the world combined, China had a unique opportunity – and responsibility – to engage constructively towards such a result, one that is in the world’s interest as well as China’s.  Unless China starts to take timely and concrete actions to reduce its excess production and capacity in industries including steel, and works with others to ensure that future government actions do not once again contribute to excess capacity, the fundamental structural problems in the industry will remain and affected governments – including the United States – will have no alternatives other than trade action to avoid harm to their domestic industries and workers.  As we heard at a hearing last week on overcapacity convened by the Administration, the viability of the global steel industry has come under intense pressure from excess production and capacity in China, and there are already significant human costs associated with the current steel market downturn.  This is a global issue and meaningful solutions will require global action, including from steel-producing countries, especially China. We will be working directly  with China on excess capacity issues in a number of different bilateral and multilateral setting in the weeks and months ahead.”

Background

The U.S. steel industry is in a crisis driven in large part by global excess capacity.  This global excess capacity has more than doubled from 2000 to 2014, led by unsustainable expansion in steelmaking capacity by China.  This amount exceeds the total crude steel production of the United States, the EU, Japan and Russia.  The impact of the current crisis on U.S. industry includes price declines, decreased profitability, and over 13,000 jobs lost.  

Against this backdrop, the Obama Administration has undertaken a series of initiatives, including enhanced bilateral and multilateral engagement, to address the excess capacity challenge facing steel and other industries.  Most recently, on April 12 and 13, the Administration convened a public hearing to solicit views from stakeholders on the excess capacity situation and its impact on the U.S. steel industry and workers.  Information from the hearing informed this week’s participation by senior Administration officials in an Organization for Economic Cooperation and Development (OECD) High-Level Meeting on Structural Adjustment in the Steel Sector.  

The Administration will follow this effort with additional multilateral avenues for engagement on excess capacity, including in the G7 and G20, as well as bilateral dialogues with China and other steel producing economies.  The Administration will pursue these bilateral and multilateral actions in addition to robust enforcement efforts at home, for example, initiating in 2015 an historic number of trade remedy proceedings, and in that same year assessing $45.5 million in penalties on importers of steel products for violating their obligation to pay anti-dumping and countervailing duties.