Ukrainian Rolled Products Need Protection

In their local Trade Department, the two largest Mexican metallurgical companies, Altos Hornos de Mexico and Ilsamex have initiated anti-dumping proceedings against Ukrainian and Russian steel rolled stock producers.

According to Mexican statistics, sales volumes of Russian and Ukrainian steel rolled products in the first half of this year have seen a 404% increase, compared to a corresponding period in the last year, reported AP. In their suit, the Mexican metallurgical companies claim that CIS exporters sell at a price on the average 30% lower than that of their competitors from other countries. Thus Altos Hornos and Ilsamex are convinced that Ukrainians and Russians sell their products below cost. The Mexicans have even computed the dumping coefficients, ranging from 23 to 45% for Russian rolled stock and from 50 to 138% for Ukrainian. These are the figures which would be adjusted by additional customs fees, which the Mexican competitors would like to have imposed on our steel rolled products.

Mexican metallurgists insist that the matter be considered at an accelerated pace, for they anticipate that in the near future Ukraine will lose similar markets in the US and Canada, and once Ukrainian metal is pushed out there, it will shower Mexico. And the local competitors will probably be buried under this mountain of metal.

What are our adversariesХ chances to win the case?

The fact that Ukraine has still not been ascribed the status of a transition economy may be decisive. Thus it will be difficult to prove that the cost of Ukrainian products could really be tens of percent lower than in other countries, one reason being the incomparably lower wages in Ukrainian metallurgy. Meanwhile, the most recent events add arguments in favor of the Mexican plaintiffs. Last week Parliament adopted a resolution on measures to get UkraineХs ferrous metal complex out of the crisis. The resolution provides for the possibility of indirect governmentХs subsidies of the sector by introducing differential, ТtargetУ tariffs for electrical power, natural gas, and transportation services, as well as special tax relief. Taking into account the measures adopted by the Ukrainian government to facilitate official procedures for export by the largest Ukrainian metal companies, and that the financial crisis and the devaluation of the hryvnia versus the dollar has substantially reduced production cost expressed in hard currency equivalents, Ukrainian metallurgists can compete with anyone in the world. Except for those antidumping cases!

At the same time, UkraineХs leadership is trying to take countermeasures against the countries initiating antidumping proceedings against us. The government submitted to the Verkhovna Rada a Draft Antidumping Code which Ukrainian officials think will generate additional budget revenues and offer effective protection to local producers. The only issue here is whether such actions could be considered as a challenge and entail too active countermeasures?