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hich factors have contributed to the development of the EU-Russia trade in steel in 2003 and the first half of 2004?

- For many years the EU-Russia trade in certain steel products has been regulated by a bilateral agreement. The present EU-Russia Steel Agreement was signed in 2002 establishing quantity limits on export shipments to the EU of such steel products as the flat and long ones, to the EU for the years 2002 to 2004. In July 2004 the EU and Russia have signed an agreement that amends the 2002 Agreement by increasing the existing quotas on Russian imports so as to take into account the EU enlargement. This new agreement adds 438,216 tons to the existing amount of 1,384,000 tons provided by this year’s quota. The decision to approve new extra shipments is in line with the traditional trade flows between Russia and the new Member States thus ensuring that companies in these countries can continue to meet their demand for steel products from Russia. Both parties have agreed to keep the present agreement after 2004 and to start informal exploratory talks to determine the amount of quotas for the year 2005.
It is important to add that, because temporary imports are not counted against the quantitative limits, only about one third of the Russian exports to the Community is subject to limits on shipments.

- What is the share of the Russian steel exports in the total steel consumption in the EU?

- About 1%

- What factors can contribute to the increase in the market share of Russian steel producers on the EU market?

- In the short run, Russia could increase its steel exports to the Community by eliminating the export levy on the export of ferrous scrap. The removal of that tax would result in an increase in the quantity limits of about 250,000 tons for 2004. In the longer run, the WTO accession would lead to completely abolishing the quantity restrictions. In that situation Russian steel companies can compete fairly and freely with others for increasing their market share.


- Could the structure of the current Russian steel exports to the EU change?

- The overall quota set by the present agreement is sub-divided in separate quotas for particular categories of flat and long products. If the Russian side would request revising the distribution of the overall quota over the different categories, the European Union would be open to discussing it.

- It is evident that the new agreement on steel has resulted from the EU enlargement. What other factors, in your view, have contributed to reaching the agreement?

- The new Agreement is indeed fully linked to the EU enlargement and the subsequent extension of the EU-Russia Partnership and Cooperation Agreement to the new member states.

- What changes have been made in the new steel agreement?

- Apart from the increase in the quantity limits, no other changes have been made.


- It is known that the Russian steel export quotas were closely linked with restrictions on shipments of ferrous scrap to the EU. How do you view this link?

- In May 1999, Russia imposed an export duty on ferrous steel scrap amounting to 15 percent (but not less than ˆ15 per ton). Some additional certification requirements with respect to ferrous steel scrap exports were adopted in 2001. As a result, the Russian exports of ferrous scrap have declined significantly and scrap prices are lower in Russia than elsewhere. The EU views the export tax on ferrous scrap as an artificial advantage to Russian steel producers, since the export duty increases the domestic steel scrap supply and reduces the price. While scrap is an input to steel-making, the export duty on ferrous scrap provides Russian producers with an unfair advantage in Russia and in third markets. The EU has tabled a proposal to Russia to eliminate the export duty on steel scrap in exchange for a sizable increase in the steel export quotas. We are looking to reach an agreement with Russia on this as soon as possible.

- Russia would like to increase its exports of high value-added steel products. Meanwhile, it is evident that the EU strives for encouraging Russia to export low value-added products. What conditions should the Russian steel companies meet in order to become equal players on the EU steel market?

- The opinion that the EU encourages Russia to export low value-added products is unfounded. The bilateral agreement only fixes the quantitative limits, and it does not cover the specifications or quality of products. EU importers are free to import products with quality that suits them.

- A number of Russian businessmen believe that Russia’s accession to the WTO will not affect the Russian steel industry. What is your opinion on that?

- The WTO accession will bring Russia into the multilateral rules-based system of international trade. Russia will be able to realize significant economic benefits from its WTO accession. Additional benefits may arise from a better access of Russian exports, including exports of steel, to foreign markets and Russia’s adherence to WTO rules and agreements, especially the use of binding dispute settlement to protect its trading interests.

- In the recent past numerous anti-dumping investigations have constrained the growth in steel trade between Russia and the EU. In your view, what are the latest changes made in the manner of these investigations of EU demands and the course of these investigations?

- One should not exaggerate the impact of the EU anti-dumping measures on the steel trade with Russia. For example, in 2003 less than 0.5% of all Russian imports of steel products to the EU were subject to anti-dumping measures. Currently, the EU anti-dumping measures are applied only to the three steel products originating from Russia. One of these three (steel ropes and cables) is under a review investigation following the request from Russian exporters.
On these issues we are maintaining a continuous open dialogue with Russian authorities. Earlier this year, our close co-operation has helped address the key Russian concern – market access for certain Russian products to markets of our new Member States.
The EU imposes anti-dumping measures only if forced to do so by dumping practices of exporters. The only true solution to the problem of constraints caused by anti-dumping is no dumping by exporters in the first place.
Our anti-dumping investigations are in line with standards that are much higher than those used by other countries, for instance, the USA, and are even stricter than the WTO rules. Thanks to this, EU anti-dumping duties are as low as possible.
Let’s not forget that there are two sides to the story - Russia is increasingly using trade protection instruments, especially safeguards. For the benefit of our important trade relations, we count on Russia, as a future WTO member, to ensure in all of its trade protection investigations the same rigor, transparency and fairness as applied by the EU.

- What is your opinion on the perspective developments on the global steel market? What will be the impact of EU-Russia relations on the steel market?

- The steel market is quite firm at world level due to the worldwide economic growth, especially in Southeast Asia, and in particular China. Sector specialists expect this tendency to continue next year. The steel industries of both the EC and Russia should be benefiting from this situation.

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Russia and European Union today

The relations with the European Union are placed high in Russia’s foreign policy as well as in the trade and economic ties. Their importance has increased even more after the recent accession of 10 new members to the EU.
The cooperation between Russia and the EU is based on the bilateral Partnership and Cooperation Agreement (signed in 1994 and put into effect in 1997). Russia has been trying to ensure its maximum participation in integration processes that bring the country closer to the EU and that coincides with its long-term national interests. The constantly growing economic and, above all, energy and infrastructure interdependence throughout the all-European space plays the major role in establishing two leading integration centers, the EU and Russia, which are the irreplaceable partners and which are responsible for ensuring Europe’s well-being and security.
The European Union remains Russia’s chief trade and economic partner. Its trade turnover with the EU has exceeded $65 billion, the amount equal to 36% of the Russian foreign trade volume. It is expected that this index will go beyond 50% with the entry of 10 new members into the EU.
Both sides have made progress in developing the concept of common European economic space (CEES). The concept has been approved at the Russia-EU summit held November 6, 2003 in Rome.
At the same time there is a number of unsolved trade problems in Russia’s relations with the EU.
Anti-dumping investigation procedures are either in effect or underway in the EU that affect a number of important commodities of Russia’s industrial export (fertilizers, ferrous metals, etc.). By available estimates, in 2003 the damage to Russia from the EU anti-dumping practice amounted to between 250 and 300 million euros.
The forthcoming expansion of the EU will directly affect the existing wide ties of Russia with countries of Central East Europe and the Baltic. For example, the automatic extension of EU tariff and non-tariff protection measures used by the EU with respect to Russia’s export can result in undermining positions of Russian exporters in the European market.
Until now the EU has not settled the question of trading nuclear fuel cycle commodities. This question is becoming more acute with the forthcoming EU membership of a number of countries, which have been traditional consumers of Russian nuclear fuel and other services related to operations by NPPs.

Source: documents of the Economic Cooperation Department, Russia’s Ministry of Foreign Affairs