Russia lifts antidumping restrictions on Ukraine, while the European Union simply asks us not to dump
The European Union has decided to teach Ukrainian industrialists to avoid scandals caused by the below cost sale of goods (a.k.a. dumping) on Western markets. This applies above all to metallurgy and textiles. On October 8 the EU officially presented in Kyiv a practical antidumping manual for Ukrainian exporters. “Trade is on the rise, borders are becoming transparent, but it is too early to speak about absolutely free trade,” Thinam Jakob, chief of the loss assessment section in the EU Antidumping Committee, said during the presentation. The manual explains basic indications that allow considering the supplies from one country or another as a case of dumping, which requires special customs duties be levied. The main principle is quite simple: the EU considers Ukrainian sales to constitute dumping if their price is lower not only than the average European but also the average Ukrainian one.
Pedro Velasco Martins, chief of the dumping assessment section, announced that Ukraine is today, by European Union standards, not a market economy country. He failed to explain what this unmarket quality consists in, honestly admitting he just did not know the answer to this question. But because Ukraine has not been officially recognized as a market economy country the EU’s vast market still remains closed to a whole series of Ukrainian goods. As of today, restrictions apply to eight commodity groups forming the basis of this country’s exports. According to the manual presented, the European Union considers a country with “a total or almost total state monopoly on trade and government imposition of all domestic prices” as a non-market economy country. Another definition of a non-market country is one where there is “basic state control over production facilities and state intervention in the economy that can significantly distort prices and expenses.” It is clear even to the layman that Ukraine has long outgrown the status so defined.
Still, the European Union is reluctant to let Ukrainian goods into their markets. It is precisely for this reason that Brussels has come up with the idea of transition-economy states, which are formally considered market- economy countries, with customs restrictions still being applicable to them. In addition to Ukraine, this status has been assigned to Russia, China, and Kazakhstan. Oddly enough, none of the EU experts who arrived in Kyiv could explain why Ukraine, 90% of whose economy has already been privatized, is still considered a non-market country. It is still unclear what makes the market-oriented structure of the Ukrainian economy worse than that of, say, Poland, to which the EU shows more affection. I do not think we should put the blame for incompetence on the experts who came to Kyiv. Perhaps they did not want to say bluntly that the status of a country is in fact determined primarily by politicians, not economists. “Some Ukrainian enterprises have submitted special documents to the EU and have already been granted the status of market-oriented entities. The restrictions do not apply to them. But many of your enterprises do not submit this kind of documents or submit what is impossible to verify. This creates too many problems between the EU and Ukraine,” Mr. Velasco Martins so foggily tried to clarify the situation.
The EU is now conducting an antidumping investigation of Ukrainian pipe exports. Tellingly, this was initiated by a company that controls about 80% of the European market. Moreover, this year the European Commission has already blamed Ukraine for exporting carbamide at dumping prices. The investigation is still ongoing. Member of the European Commission’s General Directorate for Trade Dominique Klein has warned Kyiv about a possible antidumping procedure against Ukrainian steel producers. These are just a few pieces of news from Brussels over the past two months.
It would be wrong to say the Anatoly Kinakh government is doing nothing to put an end to this dumping war. In late September the premier signed a resolution instructing the Ministry of the Economy to furnish Ukrainian exporters with full information about the risk of lawsuits to be filed over the supply of below-cost goods to Western markets. According to the ministry, Ukraine has been able to forestall since the beginning of 2000 investigations concerning uranium in the US, rolled sheet metal in Taiwan, hot rolled metal in Slovakia, carbonized steel and pipes in India, ferrochrome and ferrosilicon in the EU, carbamide in Mexico, and ammonium nitrate in Lithuania. But in reality, the problem has to be solved politically. This war cannot be won by half measures.
This supposition was also confirmed by the recently ended visit of Russian Premier Mikhail Kasianov. Our two countries have signed a memorandum setting forth measures to avoid reciprocal antidumping investigations. In addition, representatives of the countries’ economy ministries signed documents on changes and amendments to the Ukrainian-Russian protocols on free trade exclusions. These documents came to be only after the presidents of Ukraine and Russia held political negotiations. It will be recalled that Russia has been launching antidumping investigations or resorted to other protectionist measures in the past few years concerning the Ukrainian export of pipes, pipe fittings, starch, and caramel. In response, Ukraine has imposed restrictions on the import of Russian refractory materials, light bulbs, and syringes. Obviously, Ukraine should initiate in the immediate future a discussion on the status of political relations with the EU, the US, and Canada so that the markets of these countries become more open to our goods. But in the meantime, the West continues to put up quite serious obstacles to Ukrainian exports, which, judging by the words of the EU experts now visiting Ukraine, is in no way always caused by economic factors.
