WORLD TRADE
ORGANIZATIONTN/RL/W/49
4 February 2003
(03-0702)
Negotiating Group on Rules Original:  English
COMMUNICATION FROM THE UNITED STATES ATTACHING A
COMMUNIQUÉ FROM THE ORGANIZATION FOR ECONOMIC
COOPERATION AND DEVELOPMENT (OECD)
The following communication, dated 3 February 2003, has been received from the Permanent
Mission of the United States.
_______________
Attached is an OECD communiqué describing de velopments at a meeting of senior officials
from major steel-producing economies on 18-19 December 2002.  It is submitted for the information
of all Members.TN/RL/W/49
Page 2
19 December 2002
COMMUNIQUÉ
Senior Government officials from major steel-producing economies1 met at the OECD in
Paris on 18-19 December 2002.  They agreed to undertake work immediately on the elements of an
agreement for reducing or eliminating steel trade-distorting subsidies at all levels of government, in
accordance with the decisions set out below.  In addition, they agreed to strengthen the peer review of
capacity developments and to examine various options to facilitate plant closures, in consultation with
industry representatives and multilateral financial institutions, taking the different situations in
participating economies into account.
Recent developments
The discussions indicated that the underlying situation in steel remains serious,
notwithstanding some recent signs of recovery in certain markets.  While market conditions haveimproved in certain areas and some restructuring is  underway, the recovery is viewed as fragile, with
many firms continuing to struggle to maintain, or return to, profitability.  The situation has had
implications for trade in a range of steel products.  The persistence of inefficient excess capacity
world-wide has contributed to volatility in steel trade.
The decisions taken by the group are as follows:
Capacity and industry restructuring
• Peer review.  The High-Level Group (HLG) reviewed capacity developments, noting that
around 140 million tonnes of capacity could be closed during 1998-2005.  They agreed
that the intergovernmental peer review of steel capacity developments and industry
restructuring will be continued, with improvements to ensure more accurate, complete
and timely reporting, and more thorough review.  Industry association in the process will
be encouraged, as appropriate, where competition considerations do not preclude this.
This would include an exchange of views on past and present market conditions in
support of the intergovernmental discussions on capacity developments.  While alleconomies will be reviewed, examination will initially focus on those where significant
changes are expected.
• Facilitating closures.  The HLG instructs its  Capacity Working Group (CWG) to evaluate
the feasibility of options for helping to fa cilitate plant closures, including the costs
associated with permanent plant closures, where these costs tend to impede such closures.
The CWG may invite input from relevant international financial institutions, industry experts
and other specialists, as appropriate, where competition considerations do not preclude such
input and may examine the possible types of financing, including the funding of closures.  Inundertaking this work, the CWG should seek to identify the types of costs associated with
closures.  In so doing, it will examine mechanisms that could be used to provide incentives
for plant owners to close inefficient facilities.  Mechanisms to help assure that any financing
                                                     
1 Argentina, Australia, Austria, Belgium, Brazil, Bulgaria, Canada, China, Czech Republic, Denmark,
Egypt, European Commission, Finland, France, Germany,  Greece, Hungary, India, Italy, Japan, Korea, Mexico,
Netherlands, New Zealand, Norway, Poland, Portugal, Romania, Russian Federation, Slovak Republic, Spain,
Sweden, Switzerland, Chinese Taipei, Turkey, Ukraine, United Kingdom, United States.TN/RL/W/49
Page 3
is used in ways that are consistent with their intended purpose should also be explored.  The
work should be conducted with a view towards completion in 2003.
Disciplines
There was agreement by the HLG that there are two areas of high concern - (i) subsidies and
related government supports and (ii) trade remedies.  There is general consensus that work to
strengthen disciplines on subsidies has a high priority and should begin immediately, leaving open the
option of taking up steel-specific issues related to trade remedies at a later stage.
• Subsidies and related government supports.  The HLG instructed the Disciplines Study
Group(DSG) to begin work on the elements of an agreement for reducing or eliminatingtrade-distorting subsidies in steel provided at all levels of government, taking into account
existing multilateral agreements and mechanisms, as well as the needs of developing
economies.  The Group will proceed with this work on an expedited basis, holding an
initial meeting on 24-25 February 2003.  Industry representatives will be consulted, as
appropriate.
The DSG will explore how the results of this work should be fed into the WTO framework.
• Voluntary commitment.  Participants in the High-Level process agreed to consider for
decision at a later stage a voluntary commitment to refrain from introducing new subsidyprogrammes which would maintain or enhance capacity, bearing in mind development
needs.
• Other areas.  Without compromising the priority work on subsidies and related
government supports, the High-Level Group recommends that, where practicable andbased on the availability of resources, further work in other areas be pursued on the basis
of consensus.
Next steps
The High-Level Group intends to take stock of the situation during 2003, with an aim towards
concluding its activities, drawing on the conclusions from the work carried out by the CapacityWorking Group and the Disciplines Study Group.  The peer review process it established to look at
inefficient capacity and related industry restructuring  should continue beyond 2003, as long as
participants find it beneficial.
*   *   *
The High-Level meeting was held on 18-19 December 2002, in Paris, under the Chairmanship
of Mr. Herwig Schlögl, Deputy Secretary-General of  the OECD.  It was the fifth such meeting, with
previous sessions held on 17-18 September 2001, 17-18 December 2001, 7-8 February 2002 and 18-
19 April 2002.  At the February meeting, a Disciplines Study Group and a Capacity Working Groupwere established to support the work of the High-Level Group.
__________