EU plan to slash steel imports will hurt Ukraine, officials warn
Brussels’ proposed quota reduction could cost Kyiv up to €1bn in lost export revenue
The EU’s plan to slash steel imports by half would hurt Ukraine at a time the country struggles to finance its defence against Russia’s aggression, Ukrainian manufacturers and officials have warned.
Brussels has announced it will cut its steel import quota 47 per cent from July 1 and add a 50 per cent tariff to any additional imports. The measure comes in response to global overcapacity causing a surge in imports that has cost tens of thousands of jobs in European factories, forcing them to operate at reduced capacity.
But a leading Ukrainian steelmaker warned the measure would deprive Kyiv of vital export revenues.
“They will completely kill any possibility of Ukrainian companies to deliver on the European market,” said Oleksandr Vodoviz, head of the CEO’s office at Metinvest, a steel and mining company responsible for more than half of Ukraine’s steel exports to the EU.
To comply with WTO rules, the reduced quota will apply to all of the EU’s trading partners, including countries such as Ukraine that have free trade agreements with the bloc.
The measure was agreed earlier this year after pressure from members led by France, Spain and Poland to respond to a glut caused by Chinese overproduction.
The European Commission has leeway to distribute the diminished quota across trading partners and is negotiating with Kyiv and some 20 other countries a preferential rate of reduction in their steel quota.
In initial negotiations in Geneva last month, the Commission proposed applying a tariff-free bilateral quota of 713,000 tonnes to Ukraine’s steel exports, officials said. Last year, Kyiv sold 2.65mn tonnes of steel to the bloc, with the EU being Ukraine’s primary export market for the metal.
Ukrainian officials have warned that such a steep reduction — representing 70 per cent compared with last year — could cost Kyiv as much as €1bn in lost export revenues at a time when Russia is intensifying its attacks against Ukraine.
They also argue the quota reduction would be in breach of the EU trade agreement, which foresees no customs duty restrictions.
The Commission said Brussels “will take into account Ukraine’s difficult situation” and that “Ukraine will receive a country-specific quota guaranteeing its steel exports to the EU, though at a lower level than in past years”.
Ukraine also has no immediate alternative buyers to turn to, Metinvest’s Vodoviz said.
“We are looking at different markets, but on those markets [there] are Russians, Turkey, and they have electricity 10 times cheaper than we are and they are not being shelled and bombed every day . . . we don’t see any possibility to compete with them on their core markets. Our core market was always Europe,” he said.
The European parliament insisted on granting Ukraine special treatment due to its “exceptional and immediate security situation” during talks with EU countries on the quota reduction, said Karin Karlsbro, the MEP responsible for file.
“Ukraine should have very special treatment as a candidate country under very special security concerns — we have very very high expectations on the Commission to deliver on this,” she said.