Amended proposal for a COUNCIL DECISION on trade in certain steel products between the European Community and Ukraine (presented by the Commission pursuant to Article 250(2) of the EC-Treaty)

EXPLANATORY MEMORANDUM

The Partnership and Cooperation Agreement between the European Communities and their Member States, on the one hand, and Ukraine, on the other, provides in Article 22, paragraph 1, that trade in some steel products shall be the subject of a specific agreement. The previous bilateral agreement between the ECSC and the Government of Ukraine on trade for certain steel products expired on 31 December 2001. The Parties agreed to conclude a new agreement for the years 2002-2004. Negotiations on the new steel agreement were completed in December 2001, and pending its entry into force, a Decision of the Representatives of the Governments of the Member States meeting within the Council of 19 December 2001 was adopted, setting out quantitative limits for the same products covered by the new steel agreement for the period 1 January - 30 June 2002. A second Decision was adopted on 17 June 2002, amending the first one, and setting quantitative limits for the full year 2002 at the level of 2001, that is below that agreed in the new agreement, pending the resolution of the VAT refund issue on exports of scrap from Ukraine. Indeed, the draft Agreement foresees that there must be no obstacles whatsoever in trade of scrap between the Parties. The signature of the agreement has been postponed until the resolution of this trade issue.

The Commission already approved and sent to the Council a draft Council Decision fixing quantitative limits on trade in certain steel products between the EC and Ukraine.

The attached draft Council Decision amends the previous draft Council Decision in format and in substance. This draft Council Decision decreases the quantitative limits that were proposed in the previous draft Council Decision as a result of the Ukrainian Parliament passing recently a law imposing a tax of EUR 30 /tonne on export of ferrous scrap as from 1 January 2003 that will penalise the Community steel industry and will adversely affect the Community ferrous scrap market. This tax is likely to limit substantially, if not totally, exports of ferrous scrap from Ukraine to the EC since the overall cost for EC operators would be well beyond the current international price of ferrous scrap on the EC market. Quantitative limits for 2003 are therefore reduced by 30% compared to those fixed for the year 2002, pending a satisfactory solution to this issue and the conclusion of the negotiations of the new Agreement (negotiations are ongoing and both sides hope to be able to conclude in early 2003). This Council Decision would be automatically repealed when the new agreement will enter into force, and the quantitative limits contained in this Decision would be reviewed in the case that the Ukrainian tax on ferrous scrap exports was lifted earlier than the entry into force of the new agreement.

2002/0265 (ACC)

Amended proposal for a COUNCIL DECISION on trade in certain steel products between the European Community and Ukraine

THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty establishing the European Community, and in particular Article 133 thereof,

Having regard to the proposal from the Commission,

Whereas:

(1) The Partnership and Cooperation Agreement between the European Communities and their Member States, on the one part, and Ukraine, of the other part [1], provides in its Article 22, paragraph 1, that trade in some steel products shall be the subject of a specific agreement;

[1] OJ L 49, 19.2.1998, p.3

(2) The previous bilateral agreement between the ECSC and the Government of Ukraine on trade for certain steel products expired on 31 December 2001;

(3) The Parties agreed to conclude a new agreement and the negotiations of this new agreement have not yet been completed;

(4) The European Community (EC) has taken over the international obligations of the ECSC since the expiry of the ECSC Treaty, and measures relating to trade in steel products with third countries now fall under the competence of the EC in the field of trade policy;

(5) Quantitative limits for the year 2002 have been fixed by Decision 2001/933/ECSC of the representatives of the Government of the Member States meeting within the Council of 19 December 2001 [2], as amended by Decision 2002/476/ECSC [3];

[2] OJ L 345, 29.12.2001, p.75

[3]

(6) Pending the signature and the entry into force of the new agreement, quantitative limits for the year 2003 must be established ;

(7) The Ukrainian Parliament passed a law imposing a tax of EUR 30/ tonne on exports of ferrous scrap, to be applied as of 1 January 2003; this proposed tax will constitute an obstacle to the free trade of ferrous scrap and would seriously limit, if not block, exports of ferrous scrap, thereby penalising the Community steel industry and affecting adversely the Community ferrous scrap market; as a consequence, it is appropriate to reduce the quantitative limits for 2003 by 30% compared to the quantitative limits set for 2002, pending a satisfactory solution to this issue and the conclusion of the negotiations of the new Agreement,

HAS DECIDED AS FOLLOWS:

Article 1

During the period mentioned in Annex 1, imports into the European Community of steel products referred to in Annex 2 originating in Ukraine shall be subject to licensing. Licenses shall be issued only within the limits defined in Article 2.

Article 2

Imports shall be authorised, for each product group and for the whole of the Community, up to the quantitative limits indicated in Annex 1.

The period of validity of the import licence is hereby fixed at four months. Unused or partially used import licences may be renewed for two months.

Article 3

Member States shall issue licences according to rules agreed within the Steel Liaison Committee and inform the Commission thereof immediately. The Commission shall keep the Member States regularly informed of the extent to which the quantities have been used up.

The Member States and the Commission shall confer in order to ensure that these quantities are not exceeded.

Article 4

The provisions of the agreement on trade in certain steel products together with any measures to give effect to it, shall as from the date of entry into force of the agreement replace the provisions of this Decision.

Article 5

This Decision shall enter into force on the day following its publication in the Official Journal of the European Communities.

Done at Brussels,

For the Council

The President

ANNEX 1

QUANTITATIVE LIMITS FIXED FOR THE PERIOD 1.1.2002-31.12.2003 (tonnes)

Products //

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SA. Flat products //

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SA1. Coils // 46 604

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SA2. Heavy plate // 178 364

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SA3. Other flat products // 14 391

//

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SB. Long products //

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SB1. Beams // 6 273

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SB2. Wire rod // 89 624

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SB3. Other long products // 112 926

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ANNEX 2

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