Publication: Monitor Volume: 3 Issue: 117

On May 27 the European Commission issued a decree slapping a 33 percent tariff on steel pipe imports from Russia. This will be a hard blow to Russian steel makers, who will now find the export of pipe unprofitable. Exports to Europe account for more than half of the cash earnings of some of Russia’s Urals steel makers. (Izvestia, June 14)

Four East European countries also had tariffs placed on their pipe exports to the European Union, although the tariffs imposed on their pipe were only 10 percent or lower. Ukraine was exempt from the anti-dumping action — even though its steel is cheaper than Russia’s. Russian steel makers are also exasperated by the fact that Gazprom has just signed a multi-year contract to purchase high quality, large diameter steel pipe from the German company Mannesman, for use in the gas pipeline being built from Yamal to Germany.

The EU argues that Russian steel is produced with artificially cheap energy and ore. Calculation of the "real" costs of production inside Russia is extraordinarily difficult. The task was not made easier by the fact that, of the six Russian steel mills that were sent requests for information about cost structure from the EU, only one bothered to complete and return the 25 page form.

Being hit with anti-dumping quotas and tariffs is nothing new for Russian producers. Already by 1993, as the volume of Russian exports rose, 70 percent of its metals exports to the EU were affected by quotas. Moreover, more than 50 countries worldwide, from the U.S. to Thailand, have slapped restrictions on exports of Russian ferrous and non-ferrous metals — a $20 billion a year business. The EU vaguely promised to lift trade barriers against Russia in a 1994 agreement that postponed further discussion until 1998. Such problems increase the pressure on Russian negotiators to try to gain entry to the World Trade Organization — a topic that will surface at the Denver summit later this week.

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