Fifteen nations, including South Korea, have joined forces to tackle structural overproduction in key industries such as automobiles, electric vehicles (EVs), batteries, chemicals, general-purpose semiconductors, and solar panels.
While a G20-wide agreement wasn’t reached, countries concerned about overproduction have formed a separate coalition to jointly examine production capacities and market impacts in these sectors.
The Ministry of Trade, Industry, and Energy reported that on Wednesday, 15 countries issued a Joint Ministerial Statement on Addressing Structural Excess Capacity at the Organisation for Economic Co-operation and Development (OECD) headquarters in Paris, France.
The coalition includes South Korea, Argentina, Australia, Canada, the European Union (EU), France, Germany, India, Italy, Japan, Mexico, Poland, Turkey, the United Kingdom, and the U.S.
This joint statement follows discussions on structural overproduction and excess capacity as key agenda items during the G20 Trade Ministers’ Meeting held in Milwaukee, USA, from September 30 to October 1.
While most G20 members acknowledged concerns about overproduction and the need for a collective response, disagreements among some members prevented a G20-wide consensus.
Consequently, countries aligned on the overproduction issue decided to act jointly outside the G20 framework. Although the statement doesn’t name any specific country, it’s widely seen as targeting China. Major economies, including the U.S. and Europe, have long criticized Chinese firms for flooding global markets with overproduced goods, allegedly backed by unfair government subsidies.
The fifteen nations agreed that structural overproduction and excess capacity pose significant challenges to both the global economy and individual national economies. They plan to establish cooperative platforms for key industries to jointly assess the extent of overproduction and capacity issues, their market impacts, and to develop response strategies.
Initially, they will form dedicated working groups for five sectors: automobiles and electric vehicles, batteries, chemicals, general-purpose semiconductors, and solar panels.
Each group will examine the status of structural overproduction and excess capacity in their respective industries, analyze the resulting market and industry impacts, and discuss strategies to mitigate damages from overproduction and reduce market distortions.
The participating countries also called for action against non-market policies and practices that distort markets and perpetuate structural overproduction and excess capacity.
The coalition remains open to non-OECD countries joining in the future.
Before December, the participating countries plan to hold a working-level meeting to establish Terms of Reference for the sector-specific groups. They aim to share publicly available information and data on structural overproduction and excess capacity, its industry impacts, and mitigation efforts. The coalition will also utilize OECD resources and other relevant materials.
The South Korean government plans to actively participate in establishing sector-specific cooperation platforms and subsequent discussions to effectively address global overproduction issues, while strengthening collaboration with major countries.
