Russia Withdraws From the U.S. Agreement
Russia has decided to withdraw from a bilateral agreement with the US on steel exports. Sources in the Russian steel industry revealed that Russian mills back a government move to get out of a bilateral agreement with the US on steel exports. 1999 Suspension Agreement The agreement known as the 1999 Suspension Agreement, states that no US importer can import Russian material at a lower price than the floor price. Russian producers signed the agreement where they voluntarily restricted exports on 14 types of steel products in the summer of 1999 to avoid anti-dumping import tariffs the US wanted to impose. Since March though, the US introduced safeguard measures against steel imports. Sources say this could potentially cost $400-$500 million a year for the Russian steel industry. Officials at Severstal claim there is no longer any rationale behind having the agreement as the expected protection from AD actions, 201 tariffs and other restrictions in the pipeline have cancelled out whatever positive effects it may have had. Major Russian steel mills agree with backout Industry spokespeople report that all the major Russian steel mills have agreed to the move but the government still has to issue a Cabinet decision before any final move can take place. The motivating factor behind the move, sources say is if the 1999 agreement is annulled, Russians will be able to sell more semis and increase the amount of rolled products for export not subject to S201 duties. Under the agreement, Russian producers have a 60-day grace period in which they have the right to export 373,000 tons of CR steel to the US. U.S. penalties expected to be high It is expected that the US will impose 85% penalty duties on CR sheet imports from six countries, including Russia starting April 26 - backdated to January 26. This is all in addition to safeguard measures which were first imposed in March of this year. Russian products could end up with duties over 100%. A source from Novolipesk, one of Russia's largest steel producers reportedly,told the media that backing out of the agreement must be timed in order to pressure the US to put forth market economy status for Russia in trade disputes and challenges. The Russian steelmaker and other semi-producers feel the benefits far outweigh the disadvantages on exiting the agreement. The hope is that Russian products will still maintain their profitability despite a 30% tariff charge.