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Moscow, 10 April 1997 (RFE/RL) - Russia's Government has been forced to make concessions for a steel-quota agreement with the European Union (EU), because Moscow is afraid new anti-dumping duties will add to last year's losses of thousands-of-millions (billions) of dollars.

Negotiators for Russia and the EU bargained hard through last weekend to finalize a compromise on steel-trade limits. The deal, which allows Russian steel exports to the EU countries to grow modestly, will also be held up to Washington as the model of mutual restraint Moscow believes the U.S. Government should accept later in the year. That is when Russian officials expect the U.S. Department of Commerce and the U.S. International Trade Commission to rule on an anti dumping complaint against imports of Russian steel plate. Washington sources believe the issue will go to negotiations between the two governments to settle the dispute.

Canada is also reviewing Russian exports of the same steel product; and Mexico's Altos Hornos de Mexico (Ahmsa) announced this week it is filing suit against Russian and Ukrainian imports of steel plate, alleging they are being dumped at prices that are 64 percent below market prices.

Duma representatives from Cherepovets, where Russia's largest steelmaker Severstal is based, say they are considering retaliation against Canadian exports to Russia, if Severstal's exports are hit by protectionism there.

Russian and EU officials confirm they have agreed that quota volumes on several categories of steel products will rise by ten percent this year, five percent in 1998, and twp-point-five percent during 1999-2001. Separately, it was agreed that Russia will continue supplying 430,000 metric tons of steel for re-rolling at the Ekostal plant in former East Germany. This is the single largest Russian steel export to the EU, and for this reason the EU wants to keep a tighter limit on its growth.

Russia had sought the removal of EU quotas altogether, and opposed the introduction of a scheme of dual licensing for several new categories of steel products. The Europeans offered to lift quotas as soon as Moscow increases competitiveness in its steel sector, and eliminates state aid to the ailing industry, whose sales have collapsed to less than half the Soviet level.

Since 1991, Russian exports of iron and steel to the EU grew dramatically, as export sales provided domestic steelmakers with their only source of cash income. In 1994, export growth was 59 percent; in 1995, 85 percent. Last year, the volume of exports from Russia fell back by 22 percent, compared to the year before. Falling sales worldwide have resulted, Moscow believes, from a spate of anti-dumping actions. Lost earnings total more than a thousand-million (billion) dollars for the year, claims the Russian Association of Metal Exporters.

There is mixed reaction in Moscow to the terms of the deal that has now been worked out with the EU. Government negotiators say they are satisfied. The exporters are less happy, however. But they believe they have had to make compromises to avoid worsening losses from the imposition of anti-dumping duties now being sought by Italian steel-makers.

According to Alexei Litvyakov, the chief negotiator from the Ministry of Foreign Economic Relations, the new agreement aims to end quotas on Russian steel shipments by the end of the agreement period, December 31, 2001. However, "this is not obligatory," Litvyakov said. Quotas may be lifted earlier, when a review of the steel trade terms is called for at Russian accession to the World Trade Organization (WTO). Quotas may also be lifted if Moscow and Brussels agree that the competitive conditions for steel-making in Russia match the European standard.

Svetlana Stepanova, vice president of the Association of Metal Exporters, told RFE/RL "we had to make some compromises on the issue of dual licensing. We decided to accept dual licensing on condition anti-dumping duties will not be introduced. We can't say we are perfectly satisfied."

(John Helmer is a Moscow-based journalist, who contributes routinely to RFE/RL).