The focus should be on the altering policies that distort commerce not targeting market outcomes, of which excess capacity is one. Framing future trade cooperation in terms of global excess capacity isn’t the way forward. A focus on excess capacity in some manufacturing sectors ignores the trade policy challenges building up in other sectors of the world economy. So excess capacity joins the list of superficially appealing trade policy jargon such as unfair trade and managed trade. On examination, it turns out that the phrase excess capacity is slippery-rhetorically useful, but hard to pin down, even harder to operationalise, and at the same time woefully misleading. Critically we show how systemically unimportant are the trade-related knock-on effects of excess capacity such as import surges and how infrequently G20 governments have bothered to respond to import surges in excess capacity sectors during the past 10 years. Moreover, exports from these sectors account for only a small share of China’s total exports. Then we muster empirical evidence that sheds light on how little global trade is in sectors where China has excess capacity. That the steel sector is plagued by trade distortions is not in question, how the G20 has gone about tackling it is. The dissatisfaction of key steel sector stakeholders with this initiative’s execution is merited. We build our case first by critically evaluating the implementation of the only G20 initiative to tackle sectoral excess capacity, namely in the steel sector. In-Excess UK Ltd is a retail company based in Salisbury, UK. ![]() From the perspective of the global trading system, a nation’s excess production capacity is not the issue per se but the harm such excess capacity does to trading partners is. Picture Frames, Picture Hooks, Pipe Cutter, Pipe Wrench, PIR Sensor, Plane, Plant Feed. We conclude there is no compelling case for governments going spare over global excess capacity in manufacturing. To do so, we evaluate whether excess capacity in manufactured goods is a systemic threat to the world trading system. In light of the threatened imposition of tariffs on steel and aluminium products on widely-derided national security grounds, this report examines whether America’s trading partners should double down on this particular strategy. The joint EU, Japanese, and US statement pledging cooperation on such matters at last December’s WTO Ministerial Conference was an important milestone in this co-option strategy. During the past year some of America’s trading partners have sought to rein in Washington’s unilateral protectionist instincts by framing the woes of the trading system in terms of global excess capacity-essentially diplomatic code for Chinese excess capacity in manufactures.
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