Major steel-producing nations agreed to cut production in a move to help the industry find profits and save jobs. The new agreement focuses on eliminating government subsidies and will consider ways to shut down inefficient plants. The officials, who met under the banner of the Organization for Economic Cooperation and Development (OECD), began formal negotiations in late February. Officials determined that around 140 million tons of capacity could be closed by 2005, and agreed to improve the peer review of steel capacity development and industry restructuring. Officials also will consider voluntary commitments to refrain from introducing new subsidy programs and to review options for facilitating steel plant closings. The OECD communiqué sets up two working groups to: · Discuss a standstill on new subsidies around the world and to begin discussions aimed at improving subsidy disciplines in the steel area; and · Arrive at a method to facilitate closing excess inefficient steel capacity. The agreement marks the first real progress in sometimes "ill-tempered" OECD talks launched 15 months ago. The talks were stalled for much of last year by international outrage at the US decision in March to place tariffs of as much as 30% on steel imports. The agreement, however, does put off immediate consideration of these tariffs. The 37 governments promised to undertake work immediately on the elements of an agreement to reduce or eliminate steel trade-distorting subsidies at all levels of government. The governments declined to set a deadline for an agreement. However, OECD officials said they were confident that the basic elements would be put in place next year, possibly in time for the WTO's ministerial meeting in Cancun, Mexico in September. Under Secretary of Commerce Grant Aldonas told reporters that the standstill agreement on new subsidies could include admonishing states in the US to stop granting tax holidays and other subsidies to steel producers. He has indicated that some of the 140 million tons of capacity estimated to be closed by 2006 will be in the US. He cited the example of denying loan guarantees to steel companies as an effort by the US government to stop new subsidization.
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