The United States and Japanin a Globalizing World
Japan Economic Foundation:
Japan-US Forum 2019
May 17, 2019
Session II: Toward Stronger, Rule-Based Globalization

WTO and Beyond

SAKUMA Soichiro（Nippon Steel Corporation）
Sakuma’s presentation does not necessarily
represent the views of Nippon Steel Corporation.

Key Questions
1. Are WTO and other international
trade/investment agreements important tobusiness?
2. Do those trade and investment regimes reflectmodern business practices?
3. How could the US-Japan-China relationship be
developed in favor of rule-based-system?
2

1. WTO and other international trade/investment
agreements important to business?
◼ Very important➢ US-the 1916 antidumping law case (2000)➢ China-stainless seamless pipe antidumpingcase (2015)◼ Growing unilateralism and increasing skepticism

toward WTO◼ Must be preserved and improved: DSU
3

2. Do WTO and other regimes reflect modern
business practices?
◼ Regulatory vacuum created.
◼ 5Ds:➢ Digitalization➢ Decentralization/GVCs➢ Decarbonisation➢ Diffusing SOEs

➢ Diversifying security risks
4

SOEs flourish
ChinaOthers

22%India

Malaysia
UAERussia

22% of the world’s largest 100 firms are
now effectively under state control.

Of the world’s largest 204 SOEs, China is leading
the list (70 SOEs), followed by India (30), Russia(9), the UAE (9) and Malaysia (8).

Source: OECD (2016): State-Owned Enterprises as GlobalCompetitors.

Source: OECD (2013): Kowalski, P. et al.: State-Owned Enterprises:
Trade Effects and Policy Implications.

5World steel production( 100 million tons / year)

18

Others
その他
中国
China
日本＋米国+EU
Japan, US & EU

16

World
total 16

14

Others4.5

China growing

1210

After Oil Crisis
After WWII

8

China
8.1

6415

1209060300

9794

91

8885

82

7976

73

706764

61

580

55

2

Japan,NorthAmerica& EU
3.56

Top steel-producing companies(steel production million tons)

1

2000 Total 849

2007

Total

1,346

Nippon Steel 28.4

ArceloMittal

116.4

2017 Total 1,689
97.0
ArceloMittal

2

POSCO （K）

27.7

Nippon Steel

35.7

China Baowu （C）

65.4

3

Arbed （EU）

24.1

JFE （J）

34.0

Nippon Steel （J）

47.3

4

LNM （EU）

22.4

POSCO （K）

31.1

HBIS （C）

45.6

5

Usinor （EU）

21.0

Baosteel （C）

28.6

POSCO （K）

42.2

6

Corus （EU）

20.0

Tata （IN）

26.5

Shagang （C）

33.3

Ansteel （C）

23.6

Ansteel （C）

35.8

7

ThyssenKrupp （EU） 17.7

8

Baosteel （C）

17.7

Shagang （C）

22.9

JFE （J）

30.2

9NKK （J）

16.0

Tangshan （C）

22.8

Shougang （C）

27.8

10

Riva （EU）

15.6

US Steel （US）

20.5

Tata （IN）

25.1

11

Kawasaki （J）

13.0

Wuhansteel （C）

20.2

121183（Source: World Steel Association）

Sumitomo Metal 11.6
20

Sumitomo Metal

13.5

7

Distorting effects of SOEs
SOEs: Frequently emerge as players in cross bordertransactions, including M &A, purchase of natural
resource and FDIs.
◼ Competitive advantage granted by government that

undermines a level playing field.
◼ Negative excess capacity spillovers◼ Enjoy double standards in the application ofcompetition regulation.
◼ Sovereign immunity◼ Partiality towards SOEs, especially in litigation.

8

Ｃａｓｅ ACountry A

Ｓｔａｔｅ C
Subsidy
SOEImports

Ｃａｓｅ BCountry A

Ｓｔａｔｅ CSOE

Subsidy9Ｃａｓｅ CＳｔａｔｅ CSOE

Auction in Country B
１００M
８０M

Country J
Private

７８M

Country KPrivate

10May enjoy double standards in the applicationof competition lawＳｔａｔｅSOE-1

CountryY

CountryX

Private a

SOE-2
Pricefixing

Private ｂ
Private ｃ
30% 20% 25% 15% 10%
Market shares in Country Y 11

May enjoy double standards in the applicationof competition law
CountryX

ＳｔａｔｅSOE-1

CountryY

Private a

SOE-2
ＴＯＢ

Private ｂ
Private ｃ
30% 20% 25% 15% 10%
Market shares in Country Y 12

3.How could the US-Japan-China relationshipbe developed in favor of rule-based-system?
◼ China➢ No single day of democracy in its 4000 years ofhistory.

➢ Face “面子”
◼ Japan and US➢ High standards on a plurilateral and open basis➢ National regimes to address the issues arising fromSOEs, diversified security risks・・・・・.

◼ China➢ Generous standards on a multilateral basis

13.
When in Rome, do as the Romans do.

Thank you for your kindattention.
14