Russia offers compromise deal on steel

Date: 02/10/1997

By Chris Johnstone

RUSSIA is offering to limit its exports of steel pipes and tubes to the EU and subject them to minimum prices in an attempt to defuse a political row sparked by the threat of anti-dumping duties.

The European Commission is expected to give its verdict on the Russian offer in the next few days.

In order to drop the duties, officials will have to be satisfied that the price and quantity assurances on offer will be as effective in neutralising the problem of cut-price imports as the threatened 26.8&percent; hike in tariffs.

Russia is hopeful that a solution can be found to this specific problem and that wider complaints about the way it is treated under EU anti-dumping procedures will be examined.

However, a last-minute hitch threatens to jeopardise a deal.

Russia is holding out against EU insistence that an exports licensing system be put in place to monitor its exports of steel tubes. Moscow claims such a system is ill-fitted to its government procedures, would take time to establish and would be less efficient than the measures it is offering to take.

“We are hoping that some of the member states will see some sense on this,” said a Russian official.

Exports of Russian steel pipes and tubes are worth between 18 and 27 million ecu and are one of the few areas where Russia posts a trade surplus with the Union.

EU duties were provisionally raised from 10&percent; to 32&percent; in May, with the Union facing a November deadline to decide what permanent measures should be taken. The temporary measures were imposed following complaints about a flood of Russian imports from Italian steel producer Dalmine, Germany's Mannesmanroehren-Werke AG and France's Vallourec Industries.

The latest disagreement has exploded while an overall accord setting limits on steel exports between the EU and Russia has yet to be finalised.

Moscow insists that this deal - opening the Union's steel market to all Russian steel exports by the end of 2001 provided EU-style competition and state aid disciplines are taken on board - will go ahead regardless of the dispute and is only being stalled by formalities. “There are no problems there,” said one official.

But the conflict may have wider repercussions, amid Russian claims that it sums up all that is wrong with its current trade treatment by the EU.

For trade purposes, the Union still regards Russia as a non-market economy, with anti-dumping complaints channelled to the government, although the era of automatic state enterprise and state control is largely over.

“We do not agree with the current approach. It is very easy at the moment for the EU to prove a case of dumping against us because all it has to show is that prices are lower. That gives us no price advantage,” said a Russian diplomat.

Moscow is pushing for its status to be changed, but fears that a number of EU governments, especially those from southern Europe, will block such a move.

It is up to national governments, rather than the Commission, to raise the issue of changes to Russia's trade status. Moscow is hopeful that 'liberal' governments such as Germany, the UK, the Netherlands or the Nordic countries might take a lead.

In spite of warm words about integrating Russia into the world economy from French President Jacques Chirac during his recent state visit to Moscow, the Russians see little likelihood of an initiative from Paris. Too many French companies fear low-priced exports from Russia for that to be possible.

Tensions caused by anti-dumping issues were behind a highly public attack on the EU's trade policy by Russian Prime Minister Victor Chernomyrdin in June, following a meeting with Commission President Jacques Santer. Trade Commissioner Sir Leon Brittan also ran into some of the fall-out when he was snubbed by the Russian government during a visit to Moscow.