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Russia: Thailand Accused Of Violating Trade Laws

  • John Helmer



Moscow, 17 March 1997 (RFE/RL) - Russia says that Thailand is violating international trade rules by mounting an anti-dumping action against Russian steel imports.

Three big Russian steelmakers, Severstal, Novolipetsk, and Magnitogorsk, have hired Gary Horlick, a partner at the Washington law firm of O'Melveny & Myers, to defend against a complaint by the major Thai firm, Sahaviriya, involving hot-rolled steel coil exports to Thailand.

Horlick said there has been no disclosure of the details of the Thai claims, although that is required in order for the Russians to prepare for a formal hearing. This has been set in Bangkok for March 25.

Alexei Ruzhin from the disputes settlement branch of the Ministry of Foreign Economic Relations was in Bangkok last week for talks with the Thai Ministry of Commerce.

"What we witnessed," he said, "was some sort of artillery barrage." He said he presented the Thais with detailed data on Russian steel production and pricing.

According to Ruzhin, the Thai steelmaker demanded a duty of 90 percent. But this was cut back to duties ranging between 34 and 44 percent for the three Russian mill products, when the provisional penalty was introduced a few weeks ago.

Ruzhin accused the Thai government of introducing protection for Sahaviriya under cover of the anti-dumping complaint. Sahaviriya used to import Russian-made hot-rolled coil until, Russian steelmakers claim, it bought its own rolling equipment and started producing its own products.

"They see Russian imports as competition," Ruzhin said.

Ruzhin also accused the Thai government of trying to avoid the price calculation problem by refusing to treat Russia as a market economy for steel. International trade dispute rules allow that, in countries where the state controls production and pricing, comparison may be made between an export price and the price of domestic products in comparable countries.

Ruzhin attacked officials in Bangkok for artificially using Brazilian steel production data and standards.

"This is unacceptable," he said. "The Russian side insists the data provided by the Russian side on Russian pricing should be used." The Russian mills involved are almost fully privatized.

According to Horlick, there are no comparable countries for gauging Russian steel prices. He called the Bangkok move "a thumb on the scale" of protectionism.

Horlick also says that "there are serious questions about whether the Thai action complies with international law." He says that the Thai investigation should be regulated by World Trade Organization (WTO) rules, although Russia is a candidate, and not yet a member of the organization. Thailand, Indonesia, and India have given Moscow prior undertakings, Horlick said, to apply the same procedures for trade investigations, as if Russian accession to the WTO had already occurred.

Russian mill representatives claim it is impossible for the Thai steelmaker or the government in Bangkok to show that Russian export prices are below domestic product prices.

"You have to make adjustments in the domestic Russian quotes for barter transactions, delays in client payments, delays in rebates of government value-added taxes, and internal interest rates," Horlick said.

Thai officials in Moscow have acknowledged the difficulty of comparing Russian price data. But they said they are unable to respond to the new Russian charges, as the case is being handled by the Ministry of Commerce in Bangkok. Bangkok officials have been claiming until last week that the Russians were uncooperative in their investigation of the case.

Russian steel is the target for anti-dumping moves elsewhere in Asia, too, including Taiwan, India, Indonesia, and possibly soon, the Philippines. The European Union, the United States, Mexico, and Chile have also sought to stop Russian steel exports from entering their markets.

"What is unusual," Horlick says, "is the concentrated wave of these moves. If they were effective, they would cut off about 1.2 percent of the Gross Domestic Product of Russia. This makes for a big trade war against Russia."

Horlick and the government in Moscow say this is the first time Russia has mounted a full-scale counterattack in a steel trade case in Asia.

John Helmer is a Moscow-based journalist and regular contributor to RFE/RL.
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