At the end of May 2000, the regular 56th session of the OECD (Organization for Economic Cooperation and Development) Steel Committee was held in France. A Ukrainian governmental delegation headed by Sergey Grishchenko, deputy chairman of the State Committ
DIFFICULT DIALOGUES ON THE WORLD STEEL MARKET
At the end of May 2000, the regular 56th session of the OECD (Organization for Economic Cooperation and Development) Steel Committee was held in France. A Ukrainian governmental delegation headed by Sergey Grishchenko, deputy chairman of the State Committee for Industrial Policy, took part in this event.
Reference note. The OECD Steel Committee with 26 member-countries is an influential international institution, which, for the most part, defines the export/import policy on the world metal market, makes forecasts for and estimates of supply and demand for particular types of metal products and raw materials, and considers the global pricing issues. The Ukrainian representatives participated in four sessions of the Committee as observers, namely, in 1997-1999. Ukraine’s membership as an observer country has been confirmed for the year 2000.
Spokesmen of almost all the leading manufacturing countries delivered their speeches on the 56th session of the Committee giving a detailed description of the situation in metal industries of their countries. The Ukrainian delegation also presented the analysis of problems peculiar to Ukraine’s mining and metalmaking.
The most important issues of the speeches concerned the market protection problems, notably:
the USA runs antidumping inquiries against metallurgical mills of Russia, Japan, and South Korea;
India has initiated antidumping proceedings against Ukrainian metal producers;
a representative of the Russian Federation urged to cease US antidumping proceedings against Russian metal producers;
an EU representative requested that Russia and Ukraine lift the limitations of ferrous scrap exports to the EU member-states.
The head of the Ukrainian delegation S. Grishchenko and EU representative S. Salerno got into an active debate on the issue of state regulation of ferrous scrap export and of different interpretations of the term ‘state support of domestic producers’ in the developed market economies and in transitional economies.
There were also raised the issues of how well the OECD member-states adhere to the main provisions of the Kyoto treaty as regards pollution control and cooperation with the international trade union of metallurgical workers.
It was very propitious that the session was attended by representatives of private metallurgical associations, such as the Metallurgical Association of North America (the USA and Canada) and the European Eurofer assn.
Top executives of the OECD Steel Committee also gave a favorable assessment of the Ukrainian and Russian delegations’ regular participation in the Committee’s work as observers and of their timely submission of information requested.
While holding mutual consultations, the Ukrainian delegation and representatives of the US Department of Commerce discussed the question of Ukraine’s introducing of export certificates for the so-called separate exports to the USA, i.e. when two or more US ports are the ultimate destination points for exports of Ukrainian rolled steel. The Ukrainian side presented a sample export certificate, which will serve a supplement to a license for commodity exports to the USA.
The meeting considered an issue of the agreement “On suspension of antidumping inquiry against imports of selected articles of cut-to-length flat-rolled carbon steel from Ukraine” signed on October 21, 1997. In compliance with the agreement’s terms, reference price for A36 sheet steel exported to the USA was set at $/tonne 359 and base quota was fixed at 158,000 tonnes per year (the aggregate quota may reach 165,900 tpy provided that the price is 5% greater than the base one). In 1999 this agreement failed to do what it is supposed to do on the US steel market owing to changes in the base prices stipulated for in the agreement. Because of extraordinarily high reference price for 1999, imports from Ukraine totaled only 6,373.15 tonnes or 4.03% of the annual quota. Proposal of the Ukrainian delegation to reconsider the base price calculation system was rejected by US representatives due to a protracted ‘steel crisis’ of US metallurgical mills.
Signing of a new agreement ‘On suspension of antidumping inquiry against ferrosilicomanganese of Ukrainian origin’ was one of the most crucial issues for the Ukrainian party.
Reference note. The previous 5-year agreement on this issue was signed on October 31, 1994, and expired on October 31, 1999. During consultations in November 1998, April, September, and November 1999, January and April 2000, the US delegation agreed to consider proposals of the Ukrainian party regarding compilation of a new agreement.
The acting first deputy minister of trade R. la Russa and special assistant of the minister of trade, agency manager D. Spetrini acted on behalf of the US Department of Commerce in these negotiations. Representatives of Ukrainian ferroalloy traders also took part in the negotiations.
Upon the lengthy and intensive negotiations, the parties reached an agreement on the size of quota at 20,000 tonnes per year (almost three times as much as it was provided for in the 1994 agreement). The American delegation also consented not to include a provision on the so-called ‘minimal sale prices’ in the new agreement taking into account the market fluctuations that can negatively affect future supplies.
There was also made a due response to the Ukrainian proposals as regards extension of the unused part of the quota that can be carried forward to the following year up to 25% of the total annual quota (against the 15% mentioned in the previous agreement).
As regards the reference price, the parties approved a ‘market mechanism’ of price scaling to be performed once in two weeks on the basis of the data provided by the Metal Week magazine. Much attention in the course of negotiations was paid to the cost of product transportation to US consumers, bearing in mind that the price would be fixed on the FOB terms. The American party proposed the level of expenditures at 2.6 cents per pound, while the Ukrainian party argued for 4.7 cents per lb. The agreement was made at 3.75 cents per lb., which practically equals the actual costs.
The American delegation informed the session participants of a schedule of steps devised by the US Administration to overcome the so-called ‘steel crisis’. This plan includes a system of measures aimed at significant curtailment of excessive metalmaking capacities in the world, including on account of US rendering technical aid to certain countries to tackle this problem.
The ones who wrote this plan believe that its execution will make it possible to stabilize outputs in the major metal producing countries mainly at the level of their domestic metal demands. The American party is convinced that this will limit exports of metal surpluses to the USA.
The Ukrainian delegation showed its curiosity about the American plan and asked for written proposals on this issue, first of all, as regards the technical aid.
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