As structural overcapacity has emerged as a global trade issue, governments including South Korea have begun a joint response. The Ministry of Trade, Industry and Energy said 15 countries including South Korea issued a "Joint Ministerial Statement on Addressing Structural Overcapacity" on Oct. 7 local time at the Organisation for Economic Co-operation and Development (OECD) headquarters in Paris. Besides South Korea, participants were Argentina, Australia, Canada, the European Union, France, Germany, India, Italy, Japan, Mexico, Poland, Turkiye, Britain and the United States.

The statement stemmed from a G20 trade ministers' meeting held in Milwaukee in the United States over two days starting Sept. 30. At the time, most members shared concerns about overcapacity and the need for a joint response, but differences among some members prevented a G20-level agreement. Members that agreed on the overcapacity concern later chose to issue a ministerial statement separately from the G20.

The statement described structural overcapacity as a significant challenge to the global economy and to individual national economies. It listed three conditions for problematic overcapacity: capacity that persistently exceeds global demand, cannot exist under market conditions, and is created or sustained by government policies or intervention. It also warned that overcapacity in one country can increase trading partners' dependence on that country's products, leaving them vulnerable to economic coercion such as arbitrary export restrictions. It did not name any specific country.

A dedicated consultative body will first be formed in five areas: automobiles and electric vehicles, batteries, chemicals, solar panels and general-purpose semiconductors, meaning chips produced with mature process technology. The statement specified that areas of concern are not limited to those five. Participating countries will review by sector whether overcapacity and production capacity exist and their effects on markets and industries, and seek response measures. It urged countries to take action against non-market policies and practices that distort markets.

The G20 had previously pledged a joint response at the 2016 Shanghai trade ministers' meeting and the Hangzhou summit, and the Global Forum on Steel Excess Capacity was launched at the time. The statement said that despite those steps, overcapacity has worsened since 2016 and more countries are taking measures to defend their industries. It said sharing information and taking complementary measures would be more effective than separate responses.

Senior officials from participating countries decided to hold a separate meeting in Paris on the sidelines of this OECD trade committee meeting to begin cooperation talks. Non-OECD members can also join the consultative body. A working-level meeting to be held before December this year will push to establish operating plans, share publicly available information and data on the industrial impact of overcapacity and efforts to mitigate damage, and use materials from the OECD and other sources.

A ministry official said, "The government will actively participate in building sector-specific cooperation platforms and follow-up discussions to effectively respond to the global overcapacity problem, and will continue to work closely with major countries."