Here’s a breakdown of the provided text, focusing on the problem of steel overcapacity and canada’s response:
The Core Problem: Global steel Overcapacity
The Threat: Excess steel capacity is growing globally, with a notable concern being China.
China’s Role: China has a massive overcapacity of 50 million tonnes, which is projected to increase to 250 million tonnes in the next decade.
Contributing Factors:
Uncertainty in Trade Policies: U.S.President Donald Trump’s trade policies are making companies hesitant to invest in new projects,exacerbating the overcapacity issue.
Dying Demand: Overall demand for steel is declining. Domestic Industry Protectionism: Domestic industries are trying to limit imports to protect themselves, even though this doesn’t solve their underlying capacity utilization problems. State Support for China: There are accusations that China benefits from “overgenerous state support,” contributing to it’s export dominance.
Ancient Context of the Problem
Long-Standing Issue: Overcapacity has been a problem for a long time. Early Measures: Canada introduced anti-dumping provisions in 1904, targeting “special duty on undervalued goods.” This was a flexible tariff designed to equalize selling prices with fair market values.
Growth with Globalization: The problem has worsened as global trade has increased. Calls for Action: There are growing demands for more action to address the issue.
Steel Specifics: Concerns about steel have intensified with China’s rising capacity and record export levels (115 million tonnes last year).
Union Concerns: The United Steelworkers union has been vocal about the harm caused by “illegal steel dumping” and “unprofitable, below-market prices.”
Canada’s latest Tariffs and their Aims
Previous Tariffs: Canada already imposed 25% tariffs on steel and aluminum imports from China in October of the previous year. The Workaround: The steel industry believes other countries are taking Chinese-produced steel,processing it,and then exporting it as if it originated from those other countries.
New Measures Target the Workaround: The latest tariffs are specifically designed to protect against this practise.
“Melted and Poured” Clause: The 25% tariff is now applied to steel products that were “melted and poured” in China.
Increased Transparency: This move is part of a broader effort to increase transparency in steel imports.
Declaration Requirement: A new requirement, effective the previous November, mandates importers to declare the country where the metal was melted and poured. Intended Outcomes:
Tackle China’s overcapacity: The measures are expected to help address China’s “egregious” overcapacity practices.
Protect the Critical Industry: The government aims to set the critical steel industry up for the long term and make it more resilient to global trade shifts.
Criticisms and Challenges of the New Measures
Increased Costs: The added tracing and reporting requirements increase costs for businesses.
regional Dependence: The restrictions don’t account for the fact that some regions (like the Maritimes and British Columbia) rely on imports due to the cost of moving steel across Canada.
* Raising the Cost of Doing Business: The overall effect is an increase in the cost of doing business in Canada.
In essence, the text describes a persistent global problem of steel overcapacity, largely driven by China, and outlines Canada’s efforts to combat it through tariffs and increased transparency, while acknowledging the potential economic drawbacks of these measures.
