Aluminum Trade Groups Call for Trade Defense Against SOEs
The Organization for Economic Cooperation and Development, which tried and failed to coordinate restraints on steel overproduction, reported that the World Trade Organization hasn't been able to discipline support for and from state-owned enterprises, and that free trade agreements are likely the best route to curtail their trade distorting effects.
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The analysts wrote, "While a multilateral discipline on [state-owned enterprises] covering all WTO Members would constitute a first-best outcome, increasing the number of WTO Members having [preferential trade agreements] with disciplines on SEs could constitute a first avenue. Yet, garnering consensus on even basic common rules across the WTO membership or among a broader number of WTO Members may prove very difficult."
Aluminum trade groups from Europe, the U.S. and Japan issued a press release July 18 hailing the June report, saying, "We fully support all efforts by our governments to update multilateral trade rules and effectively address the non-market practices of state enterprises in global aluminum markets." The group pointed out that the OECD noted that state-owned enterprises' presence in heavy industries such as steel and aluminum is growing, "where firms having 25% or more government ownership generated nearly half of all revenue among sampled firms in 2022."
The aluminum trade groups added: "But until such time as there is a global level playing field and fair competition in aluminum markets, we urge governments to apply trade defense measures to enable the survival of our otherwise competitive industrial base."