OECD Proposes Steel Subsidies Capped At 0.5% Of Value Of Production

The Organization for Economic Cooperation and Development (OECD) has proposed setting subsidies for the steel industry at a ceiling of 0.5% of the value of production, to be used exclusively for research and development. The OECD, which initiated negotiations several years ago to do away with steel subsidies, sent a letter on March 31 to the principal steel-producing countries asking them to respond to a plan to restart the talks. Herwing Schloegl, OECD deputy secretary general, proposed authorizing aid to steel companies to help pay for mandated environmental cleanup after closing down factories.

In June last year, the 37 principal oil-producing countries, representing about 90% of global production, halted their OECD-led negotiations to eliminate subsidies after failing to overcome their major differences. Even if all the participating countries agree in principle on eliminating public aid to the steel industry, differences remain about exceptions to a ban.

The exceptions include aid to research and development and environmental protection, the ability of developing countries to continue to support their steel industry, and countervailing duties that certain countries would like to be able to apply to support their steel industry when it is going through a difficult period.

Copyright Agence France-Presse, 2005

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