US, EU Push for Action Against Asia’s Excess Factory Capacity

U.S. Trade Representative Jamieson Greer said Thursday that European Union countries have reached a broad consensus on the need to address global manufacturing overcapacity, particularly in Asia, as concerns grow over its impact on international trade and domestic industries.

Speaking in an interview with CNBC, Greer said all EU member states recognize the importance of taking additional measures to tackle excess factory capacity. However, China, Vietnam and several other countries remain opposed to the approach, highlighting divisions among major economies over global industrial policies.

The issue gained momentum Wednesday when more than a dozen Group of 20 (G20) countries, along with the European Union, signed a joint statement pledging to exchange information and strengthen cooperation on coordinated responses to industrial overcapacity.

The agreement represents an effort by participating economies to address concerns that excessive manufacturing output could disrupt global markets, intensify competition and place pressure on domestic producers.

Greer acknowledged that the specific measures resulting from the agreement have not yet been determined. Nevertheless, he pointed to recent European efforts to engage directly with China as evidence that governments are beginning to respond.

"What that looks like in practice has yet to be seen," Greer told CNBC, referring to the coordinated action outlined in the joint statement.

He also highlighted the EU's discussions with Beijing this week, during which European officials urged China to limit exports to the European market amid growing concerns about what he described as "China shock 2.0."

The term reflects fears of another wave of Chinese manufactured goods entering international markets, potentially creating additional challenges for industries competing with lower-cost imports.

While the United States and European Union appear increasingly aligned on addressing excess industrial capacity, opposition from China, Vietnam and other economies underscores the difficulty of securing a broader international agreement.

The G20 initiative could provide a framework for greater information sharing and policy coordination, although its effectiveness will depend on whether participating countries translate their commitments into concrete action.

For now, the debate over Asian manufacturing overcapacity remains a significant issue in global trade relations, with Washington and Brussels seeking stronger cooperation to protect industrial competitiveness and address market imbalances.