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Ukraine Resumes Anti-Dumping Investigations Against Steel Products

Date of publication: 17 July 2023

Olena Omelchenko, Partner, Head of International Trade Practice

Source: GMK Center

ICIT plans to complete investigations on coated steel, wire and pipes from China, and bars from Belarus

The war made its own adjustments to the trade policy of both Ukraine and in relation to our country. A number of international partners partially opened their markets for Ukrainian products. Simultaneously with the outbreak of the war, Ukraine actually suspended anti-dumping investigations initiated before the war against steel products from a number of countries. Business is following with interest the resumption of the work of the Interdepartmental Commission on International Trade (ICIT).

Trade policy at war

In the face of a full-scale invasion, Ukraine has changed its trade policy. A complete ban on imports or sanctions affected all goods from Russia. All Russian products were replaced to some extent by Ukrainian or imported goods, mainly from the EU.

There is no formal ban on the import of products from Belarus, but due to the war and border closures, this import is not carried out directly. Many companies have made a decision for themselves to refuse to import products from Belarus, although it is partially present on the Ukrainian market – products are redirected in transit through the EU countries.

Of course, amid the decision of the European Union to abolish duties on Ukrainian goods, our country cannot apply any trade restrictions for European products. In the current conditions, the European market is our №1 export market, therefore Ukraine must also provide priority access to European products.

Work of the ICIT

After the outbreak of a full-scale war, the work of the ICIT was not considered a priority. A meeting of the ICIT, where a number of anti-dumping duties would be considered and applied and a number of investigations would be launched, was scheduled for February 24, 2022, the day the Russian invasion began. For obvious reasons, it did not take place. Subsequently, the Ministry of Economy revised its decisions and rejected all applications and requests from Ukrainian producers to initiate investigations.

In 2022-2023, the ICIT has not launched any new investigations. Meanwhile, during this period, the commission met several times and completed all special (protective) investigations without taking any measures. This is probably due to the fact that special measures are applied to all countries without exception, including the EU, the US and other trading partners that provide significant military assistance to Ukraine.

No significant decisions were taken in anti-dumping investigations, despite the expiration of the deadlines provided by law. This creates uncertainty for businesses and they are waiting for the ICIT to resume its full-fledged work on anti-dumping investigations that began even before the start of the war. According to a number of companies, important investigations have not yet been completed, and anti-dumping duties are the only tool to protect Ukrainian producers from unfair trade.

Lines of investigation

Now it makes sense to take restrictive measures against goods from Belarus, China, India, which cause damage to national producers. For Ukrainian producers, the issue of protection against the expansion of products from Turkiye remains relevant. In turn, unscrupulous importers often use Malaysia to circumvent existing restrictive measures, mainly in terms of Chinese products.

China continues to supply products to Ukraine without hindrance, from which our producers suffer. They cannot compete in price with Chinese products, which are produced for the Ukrainian market. Moreover, during the war, the financial and economic situation and the working conditions of domestic producers worsened – power outages, regular shelling and loss of human resources reduce their ability to compete with Chinese products.

Certain difficulties for Ukrainian producers arise when competing with products from Turkiye. The introduction of trade restrictions against Turkish products is faced with a political factor. In my opinion, it is possible to initiate investigations against products from Turkiye, but making the necessary decisions will be much more difficult than, for example, against Chinese products.

Steel investigations

ICIT is currently investigating imports of coated steel and wire from China. Ukrainian producers are looking forward to the decision on these processes, as the investigations should have been completed a year ago, and our enterprises could maintain their share in the domestic market and not be forced out by Chinese goods.

Recently, the Ministry of Economy presented the results of coated rolled steel investigations. It can be predicted that a decision can be made in the near future. The Ministry has taken the position of national producers, who, in the current difficult conditions, want to protect their market from cheap imports from China. The document says that it is planned to apply a duty in the range from 30.76% to 48.14% of the customs value, depending on the foreign manufacturer.

This decision will create an entire industry in Ukraine. Today, this market is very unbalanced and unpredictable, as Chinese products are imported at dumping prices. All neighboring countries have trade restrictions for Chinese coated steel, and only in Ukraine there is no such duty.

The very fact of the beginning of the investigation and the hope that the duty could be applied has already given impetus to the opening of new production facilities, in particular, in Bila Tserkva. Ukrainian processors expect the appearance of Ukrainian products.

In part of wire investigations it can be noted that the domestic market for this product is not so large. But Ukrainian producers have been waiting for a decision on the results of the investigation for more than a year. The adoption of an anti-dumping duty against imports from China is critical for Ukrainian producers. In anticipation of restrictive measures, they produce goods at a loss, compensating for financial losses through the release of other products. The introduction of the duty is necessary in order not to completely lose the domestic market before the decision of the ICIT is made.

Under war conditions, imports of similar Chinese products grew by 40%, while domestic production fell to 45% of 2020 levels. A timely decision on the application of anti-dumping measures against Chinese wire would not allow the deterioration of the position of Ukrainian producers in the domestic market.

In part of pipe investigations (cold-drawn and cold-rolled seamless steel pipes) from China, it also remains overdue, as it was supposed to be completed by September 2022. It is noteworthy that anti-dumping measures in relation to cold-rolled seamless pipes from China are already in force (from June 2020 to June 2025). The investigation into Chinese cold-drawn and cold-rolled pipes has not yet been completed, so any results can be expected.

Among other things, there is a suspicion that the decision of the ICIT dated 02.09.2020 №AD-444/2020/4411-03 “On the application of final anti-dumping measures regarding the import to Ukraine of seamless hot-formed steel pipes originating from China” may be changed. In this case, we can talk about the revision of price commitments that were previously accepted by Chinese manufacturers.

Regarding the revision of anti-dumping measures against bar import of carbon and other alloy steels from Belarus (the revision was initiated by the decision of the Commission dated September 24, 21 №AD-509/2021/4411-03), a change in the size of the anti-dumping duty should be expected in order to protect the Ukrainian producer.

Ukraine has always been famous for its liberal position in trade. Since the beginning of the war, all prohibitions and measures have been concentrated on Russian products. The resumption of the work of the ICIT and a number of anti-dumping investigations on steel products (albeit with a delay of 1-2 years) may begin to change this trend. Imports of steel products to Ukraine have already reached the pre-war level, primarily due to the losses of Ukrainian producers. Perhaps the Ministry of Economy is already beginning to pursue a balanced trade policy to protect the domestic market.