G20 trade ministers have warned that worsening global overcapacity is threatening domestic industries, jobs and economic stability, calling for coordinated international action to tackle production distortions and government policies that fuel excess supply.
In a joint ministerial statement following discussions in Milwaukee, Wisconsin, on September 30 and October 1, 2026, trade ministers from 15 economies and the European Union identified structural excess capacity and production as a growing challenge for the global economy, warning that the problem is damaging industries and supply chains despite nearly a decade of international commitments to address it.
The statement names five key sectors of concern: automobiles and electric vehicles (EVs), batteries, chemicals, foundational semiconductors and solar panels. Ministers warned that failure to act could cripple domestic industries, displace local production and destroy jobs.
The statement was issued by trade ministers from Argentina, Australia, Canada, the European Union, France, Germany, India, Italy, Japan, the Republic of Korea, Mexico, Poland, Türkiye, the United Kingdom and the United States.
The discussions took place under the US G20 presidency, which made structural excess capacity and production one of its key priorities. Ministers said the issue has gained growing international recognition as a fundamental challenge for individual economies and the global trading system.
The ministers pointed to earlier G20 commitments in 2016, when trade ministers raised concerns about excess capacity in certain industries and its impact on trade and workers.
At the time, the G20 backed cooperation through the OECD Steel Committee, paving the way for the creation of the Global Forum on Steel Excess Capacity (GFSEC), a platform designed to develop collective solutions and improve market functioning in the steel sector.
At the Hangzhou Summit later that year, G20 leaders unanimously acknowledged the scale of the challenge.
“We recognize that the structural problems, including excess capacity in some industries, exacerbated by a weak global economic recovery and depressed market demand, have caused a negative impact on trade and workers. We recognize that excess capacity in steel and other industries is a global issue which requires collective responses.
"We also recognize that subsidies and other types of support from government or government-sponsored institutions can cause market distortions and contribute to global excess capacity and therefore require attention. We commit to enhance communication and cooperation, and take effective steps to address the challenges so as to enhance market function and encourage adjustment.”
Despite those pledges and subsequent efforts by some G20 members, the latest statement says structural excess capacity and production have worsened since 2016, inflicting damage across domestic industries and their supply chains.
The ministers' latest assessment focuses on production that persistently exceeds global demand, would not be viable under market conditions and is created, sustained or encouraged by government policies or interventions.
According to the statement, such excess capacity fuels overproduction and the concentration of manufacturing, deters market-based investment and capacity building, and undermines market-based exports.
The ministers also warned that distorted prices and production patterns can discourage new competitors, stifle innovation and weaken competition.
A further concern is the growing dependence of trading partners on products from countries with structural excess capacity. The statement warns that such dependence can leave economies more vulnerable to economic coercion, including arbitrary export restrictions.
The ministers said they were united in their concern over these distortions and their wider economic consequences.
The statement highlights concerns about existing and projected excess capacity across five sectors: Automobiles and electric vehicles
Batteries; Chemicals; Foundational semiconductors; Solar panels.
Ministers warned that without timely and effective action, excess production in these industries could undermine domestic manufacturing, wipe out jobs, damage national economies and obstruct industrial development.
They also cautioned that the consequences could extend to living standards, making the issue a broader economic and development concern rather than simply a dispute over trade flows.
The ministers called on all countries to eliminate structural excess capacity and production in their economies, including by ending non-market policies and practices that distort markets and contribute to the problem.
They acknowledged that an increasing number of countries are already taking measures to protect their industries, workers and economies from the effects of such distortions. However, they argued that unilateral measures would be more effective if countries coordinated their responses, exchanged information and pursued complementary action.
To move beyond declarations, the ministers committed to establishing dedicated sectoral platforms to examine the problem and develop effective responses, beginning with automobiles and EVs, batteries, chemicals, foundational semiconductors and solar panels.
Senior officials were scheduled to begin work on the sidelines of the OECD Trade Committee, with other countries inside and outside the OECD invited to participate.
The ministers committed to meeting at the technical level before December 2026 to establish terms of reference, exchange non-confidential information and data, assess the impact of excess capacity on the sectors concerned, review mitigation efforts and identify gaps in available information. The work will draw on OECD research and other sources where appropriate.
The statement also commits the participating economies to exploring effective and, wherever possible, complementary measures to shield their economies from the damage to trade and workers caused by structural excess capacity and production.
The stated objective is to restore conditions in which market-oriented competition can function effectively across the affected industries.
Whether the initiative delivers results will depend on how far participating economies can translate their shared concerns into coordinated action against the policies and practices they say are distorting global markets.
