Role of subsidies in creating overcapacity
and options for addressing this issue in the Agreement on Subsidies and
Countervailing Measures
The
following communication, dated 12 April 2017, is being circulated at the
request of the Delegations of Canada, the European Union, and the United States.
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Document
G/SCM/W/569 (The contribution of the WTO to the G20 call
for action to address certain measures contributing to overcapacity),
submitted by the European Union, Japan, Mexico and the United States, suggested
that industrial overcapacity has become a major problem for the global economy
as it distorts international trade and creates multiple negative externalities.
The document also noted the recent statement by G20 leaders acknowledging that
collective action is needed to address the issue of overcapacity. Against that
backdrop, the document identified a set of three initial questions around which
Members could launch a useful discussion in the Subsidies Committee.
Given
the complexity of the issue of subsidies and overcapacity, and the general
nature of the three questions raised in the previous document, the purpose of
this paper is to present some initial thoughts and ideas aimed at fostering a
more detailed debate among Members on how to tackle subsidies contributing to
overcapacity. Addressing the issue of overcapacity should not be seen as the
sole prerogative of one forum. Rather, different fora, including the Global
Forum on Steel Excess Capacity facilitated by the OECD, can usefully look at
various aspects of the issue. The relevant and appropriate aspect for the
Subsidies Committee is how certain types of subsidies contribute to
overcapacity, and how best to address this aspect of the issue.