RUSSIA REACHES STEEL AGREEMENT WITH EUROPEAN UNION.

On April 5 an EU delegation in Moscow reached agreement with Russia over the gradual lifting of quotas on Russia’s steel exports to the EU. (Reuter, April 8) Under the accord, EU quotas on Russian steel will be raised by 10 percent in 1997, by another 5 percent in 1998, and by 2.5 percent more each year until 2001. The EU signed a temporary trade agreement with Russia in June 1995, which allowed the EU to continue imposing quotas on Russian textile and metal exports. EU imports of iron and steel from the former Soviet Union (80 percent of which come from Russia) rose from 2.76 million tons in 1993 to 7.49 million tons in 1995, prompting the EU to introduce anti-dumping quotas on an increasing number of metal products. The EU claimed that Russia was selling its steel at below production cost, thanks to tax breaks and artificially cheap electricity, and cited production costs from Brazil to prove their point.

There is little evidence that the EU has revised its analysis of the economics of Russian steel. More likely, the latest accord reflects a political decision to remove what had become a sore point in Russo-European relations. Indeed, during a visit to Tokyo on April 8 German president Roman Herzog reaffirmed EU support for Russia joining the Group of Seven industrial nations — something which has been suggested by the U.S. but blocked by Japan. (Itar-Tass, April 8)

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