Milwaukee, Oct 3 (IANS) Majority of G20 members have raised doubts about the effectiveness of existing World Trade Organization-authorised measures in tackling structural excess capacity, saying current trade remedies are too slow and fail to address policies responsible for market distortions.
The unusually pointed assessment emerged from the G20 Trade Ministerial held here under the US presidency on Sept 30 and Oct 1.
Trade ministers discussed structural excess capacity and production as one of four major issues confronting the global trading system, alongside the weaponisation of food, forced labour in global supply chains and reform of the Most-Favoured Nation principle.
According to the chair’s statement, G20 members examined cases in which production persistently exceeded global demand and would not have existed under normal market conditions.
They also discussed capacity created, sustained or contributed to by government policies or interventions.
Several members distinguished such structural excess capacity from cyclical changes in production capacity caused by normal market movements in supply and demand.
The discussion then turned to whether existing international trade rules were capable of dealing with the problem.
“A significant majority of members noted that although trade defense instruments have been authorized under WTO rules, they are ineffective at addressing the underlying policies and practices that contribute to the problem,” the chair’s statement said.
“Existing trade remedy tools are too slow and do not sufficiently target the source of the structural excess capacity and production.”
The statement also recorded a stark assessment of the WTO’s ability to produce a multilateral solution.
“At the same time, it was noted that the WTO is unlikely to deliver any progress on that issue, given it is unable to deliver solutions on relatively simple issues in the trading system,” it said.
The United States sought G20 consensus on a ministerial statement that would have called on countries to eliminate structural excess capacity and production in their economies, including by ending non-market policies and practices that distort markets.
The proposal also sought agreement to establish new, dedicated sectoral platforms where G20 economies could examine excess capacity and take complementary action in sectors of concern.
But consensus proved elusive.
The draft was supported by all but “a handful of members,” according to the chair’s statement. A few members “firmly rejected” creating a pathway towards cooperative action.
US Trade Representative Jamieson Greer said after the meeting that many countries nevertheless supported addressing the issue.
“Many G20 members expressed resolve to address structural excess capacity and production in key sectors of concern,” Greer said. “I am disappointed that a handful of members rejected creating a pathway toward cooperative action.”
The disagreement came a decade after the G20 had addressed the same problem.
At their 2016 meeting in Shanghai, G20 trade ministers expressed concern about excess capacity in certain industries and its impact on trade and workers. That process contributed to the establishment of the Global Forum on Steel Excess Capacity.
Later that year, G20 leaders meeting in Hangzhou unanimously recognised excess capacity in steel and other industries as a global problem requiring collective responses. They also acknowledged that subsidies and other government support could cause market distortions and contribute to excess capacity.
The US G20 presidency said in its Milwaukee chair’s statement that, despite those earlier commitments and actions by some members, structural excess capacity and production had worsened since 2016 and was affecting domestic industries and their supply chains.
The United States holds the G20 presidency this year. The United Kingdom is scheduled to assume the presidency in 2027.
–IANS
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