India is among the United States and 13 other countries that have signed a joint ministerial statement geared towards dealing with structural excess capacity and production in key manufacturing industries. The joint ministerial statement was issued by the US Trade Representative (USTR) on October 7, 2026, after the deliberations held at the G20 Trade Ministerial in Milwaukee, Wisconsin. The 15 participating nations committed to taking steps to combat the distortionary effects of non-market policies and their role in causing overproduction, while pledging more information sharing and cooperation.
What is Structural Excess Capacity?
Structural excess capacity entails the condition where the production capacity/output of an economy is consistently higher than the market demand and this is caused by the intervention of some policies that would not usually happen in the absence of market forces.
According to the joint statement, structural excess capacity may cause overproduction and production concentration, and it discourages investments and capacity building efforts, as well as market-oriented exports.
The participating nations also noted that the structural excess capacity in one nation can influence trading partner nations, since it causes price distortions, discourages competition, and discourages new entry into the market.
Joint Ministerial Statement Signed by 15 Economies
The joint statement was signed by the following 15 economies,
- Argentina
- Australia
- Canada
- European Union
- France
- Germany
- India
- Italy
- Japan
- Republic of Korea
- Mexico
- Poland
- Türkiye
- United Kingdom
- United States
These 14 economies, along with the United States, signed the joint statement. Senior officials convened on the sidelines of the OECD Trade Committee to initiate the work for dealing with excess capacity in manufacturing sectors.
Key Manufacturing Sectors Identified
The following manufacturing sectors were identified by the participating economies that have structural excess capacity and production issues.
Focus Areas Include,
- Automobiles and electric vehicles
- Batteries
- Chemicals
- Foundational semiconductors
- Solar panels
According to the economies, the persistent excess capacity in these sectors can impact their domestic industries and production among others.
What Has Been Agreed to be Done by the Countries?
The signatories urged countries to address the issue of structural excess capacity and production through ending non-market policies and practices distorting the markets.
Also, there was an agreement on cooperation through new dedicated sectoral platforms.
Some of the areas of cooperation to be addressed through these platforms are,
- Exchange of non-confidential information and data.
- Reviewing the reasons and consequences of excess capacity.
- Reviewing the gaps in available information.
- Reviewing possible measures for minimizing the adverse impact on trade and workers.
- Reviewing possible complementing measures to safeguard the economies against market distortions.
- Utilizing the work done by the OECD and other international organizations.
The participating economies will meet at technical level by December 2026 to finalize the terms of reference.
Globally Excess Capacity and the G20
The problem of excess capacity is not new to the G20. In 2016, during the discussions between G20 Trade Ministers, the problem of excess capacity in certain sectors of the industry in Shanghai was considered with regard to its impact on trade and employment.
The dialogue helped to achieve cooperation through the Global Forum on Steel Excess Capacity (GFSEC). It is a mechanism devoted to creating collective solutions to structural excess capacity in the steel sector.
G20 leaders recognised at the G20 Hangzhou Summit in 2016 that excess capacity in steel and other industries was a global issue that needed collective actions to address it. Moreover, subsidies and other kinds of state support were seen as a factor of market distortions and excess capacity.
Global Forum on Steel Excess Capacity
The Global Forum on Steel Excess Capacity (GFSEC) appeared because of international discussions on issues related to excessive steel capacity.
It is an instrument through which economies exchange information on policies of excess capacity in the steel industry.
The 2026 statement enlarges the scope of the current discussion going beyond the steel industry and including automobiles, EVs, batteries, chemicals, foundational semiconductors and solar panels.
Why Is Excess Capacity an International Trade Problem?
Continued excess production may lead to the situation where too many products are being offered on the international market compared to the level of global demand for those products. This may lower their price and influence other producers in different countries.
As per the joint declaration, such distortions can,
- Deter investment in market-based production.
- Make it hard for new companies to enter such sectors.
- Influence domestic production and employment.
- Affect international trade and production.
- Lead to dependency on products of one particular country.
- Make one vulnerable in case any trade barriers are introduced.
Hence, the participating countries focused on coordination, exchange of information and complementary policies.
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