AIIS Finds China SOE Policy Unacceptable for Market Economy Status

Written by Sandy Williams

The American Institute for International Steel (AIIS) released the following statement urging the U.S. government not to support market economy status for China.

Falls Church, VA. April 12, 2016. The recent steel production cutbacks in China are positive but not sufficient steps in the right direction because they leave in place the state-owned enterprises [SOEs] that were so instrumental in fueling the current global glut in steel, and they do not address the urgent need for binding disciplines to restrain their use.

The April 10, 2016 confirmation by the vice head of China’s Industry Ministry that despite recent production cutbacks China will still have at least 400 million tons of excess steel capacity by 2020—a number that exceeds the combined 2014 steel production of the United States, the European Union, Canada, and Mexico–affirms the June, 2015 assessment by OECD Steel Committee Chairman Risaburo Nezu, who warned that any structural reform in China will be slow because “…most steel manufacturers in China are state-owned enterprises [SOEs].”

SOEs are among the most pernicious of all trade barriers because they make real market competition all but impossible.

Accordingly, we strongly urge the United States Government to not assent to market economy status for China until we see substantial progress toward securing binding disciplines on trade-distorting SOEs in steel.

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