Subsidies and overcapacity

The United States presented a joint paper (G/SCM/W/575) on behalf of itself, Canada, the European Union, Japan and Mexico calling for the SCM committee to consider the impact of below-market financing  - specifically, low-cost lending by state-owned banks to state-owned industries to boost demand during times of severe recession, and subsequent steps to convert the loans provided to equity (e.g. debt-to-equity conversions) – in contributing to overcapacity in steel and other industries. 

The result of these actions is distortions in the domestic market that spill over into the international economy and distort international trade patterns, the proponents said. The immediate question is how should WTO subsidy disciplines be improved and strengthened to address this. Members should consider whether below-market financing should be subject to stronger subsidy disciplines and how to improve transparency obligations for the reporting of such subsidies, the United States said.

Several members underlined the need to address the problem of overcapacity, with most of them voicing support for addressing the issue in the committee.

China reiterated its belief that the SCM committee was not the appropriate forum to discuss overcapacity issues and that the problem was not subsidies but the slow recovery of the global economy since 2009 and sluggish demand; G20 leaders have confirmed the need to address this issue and that a solution required global cooperation. China said it was making a contribution by reducing excess capacity in its domestic steel sector and reducing jobs. The Russian Federation said it was premature to consider possible additional WTO subsidy disciplines, noting the G20 Global Forum on Steel Excess Capacity is addressing the issue.

Fisheries subsidies

Australia, the European Union, the United States, Iceland, New Zealand and Norway all took the floor to underline the importance for members in meeting their commitments under paragraph 2 of the Buenos Aires Ministerial Decision on Fisheries Subsidies. Paragraph 2 states that members "re-commit to implementation of existing notification obligations under Article 25.3 of the (ASCM) thus strengthening transparency with respect to fisheries subsidies". 

Several members underlined the importance of submitting timely and complete notifications and implementing commitments under the Buenos Aires Ministerial Decision; one member noted that more than half the membership failed to meet the deadline for submitting their 2017 subsidy notifications, and others have not included any information on their fisheries subsidies, including some of the world's largest fishing nations.

Continued concerns about missing subsidy notifications

The chair of the SCM committee, Ieva Baršauskaitê (Lithuania), once again voiced concern with the poor compliance in submitting required subsidy notifications. Under Article 25 of the ASCM, members must notify any subsidy - as defined under Articles 1.1 and 2 of the Agreement – that is granted or maintained within their territories. Members must submit subsidy notifications no later than 30 June of each year.

The chair reported that, unfortunately, compliance with the obligation to notify subsidies "remains discouragingly low".  As of 24 April, 86 WTO members have not submitted their 2017 subsidy notifications, while 66 members still have not submitted their 2015 notifications. In addition, 56 members have still failed to submit notifications for 2013, with many of these members having never notified their subsidies or having only done so in the distant past.

Several members voiced their concerns about the poor state of subsidy notifications.

Revised EU legislation on protection against dumped and subsidized imports

In response to the European Union's submission of its amended legislation on protection against dumped and subsidized imports (G/SCM/N/1/EU/2/Suppl.2), several members said they wanted to reserve their right to raise the matter at the 25 April meeting of the WTO's Committee on Anti-dumping Practices or at the next SCM Committee meeting in October. One member said it was concerned about provisions allowing EU authorities to investigate alleged subsidies which were not identified in the application for the initiation of an investigation.

The European Union said the purpose of the amended rules was to focus on identifying significant distortions due to state interference which affects costs and the determination of normal value for anti-dumping purposes.  The elements that can be taken into account to determine significant government intervention are not exhaustive, the EU said, and it explained how the amended regulation would deal with subsidies discovered during the course of the investigation.

China

The United States once again raised concerns about China's non-notification of possible subsidy programmes for the steel sector; company reports of the Chinese steel producers themselves show many subsidy programmes, the US said, with more recent annual reports indicating the level of support has been maintained. The European Union said notification of subsidy programmes was crucial to the effective work of the SCM committee and that China's notification was not complete with regards to subsidies provided at the sub-central level. Other members highlighted the importance of transparency.

China said it noted the consistent concerns of the United States and the European Union on this issue. China has made great efforts to address these concerns, and said it was currently working on a new and full notification which would cover subsidies at both the central and sub-central levels.

United States

Turkey once again raised concerns about the US initiation of countervailing (CV) investigations targeting imports of iron and steel products from Turkey, while Australia said it was concerned about the US Commerce Department's broad finding of subsidization in a countervailing investigation on silicon metal from Australia. China said it was concerned about the US practice of applying "adverse facts available" in countervailing investigations against China.

In response to Turkey, the United States said it believed its investigations were fully in line with WTO requirements. To Australia, the US said the finding that the subsidies in question were specific to the silicon metal industry was fully consistent with the ASCM. To China, the US said its application of adverse facts available was fully compatible with WTO rules.

New chair

Members confirmed the appointment of Mr Pedro Negueloaetcheverry (Argentina) as the new chair of the SCM committee for 2018.

Next meeting

The next meeting of the SCM committee is tentatively scheduled for 22 October 2018.