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

(presented by the Commission)

EXPLANATORY MEMORANDUM

The Partnership and Cooperation Agreement between the European Communities and their Member States, on the one hand, and Ukraine, on the other hand, 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 European Coal and Steel Community 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. However, the Government of Ukraine was not reimbursing the VAT to Ukrainian exporters of ferrous scrap, thereby introducing a disincentive and an obstacle to the export of ferrous scrap. This is contrary to the provisions of the draft Agreement that explicitly foresees that there must be no obstacles whatsoever in trade of ferrous scrap between the Parties. Pending the resolution of this VAT refund issue, the signature of the Agreement was postponed. Furthermore, towards the end of the year 2002, Ukraine further imposed a tax of EUR 30/tonne on the export of ferrous scrap.

In the absence of an Agreement, autonomous measures fixing quantitative limits on the imports of certain steel products had to be taken for the years 2002 and 2003 by the ECSC and, after the expiry of that Treaty, by the EC.

However, in parallel, negotiations to conclude a new Agreement have taken place but have not yet been finalised. Pending the conclusion and entry into force of the new Agreement, autonomous measures fixing quantitative limits for the year 2004 are necessary. The quantitative limits for the year 2003 were set taking into account the imposition by Ukraine of a tax of EUR 30/tonne on the export of ferrous scrap. Given that that tax level is unchanged, the quantitative limits for the year 2004 have been set at the same level of the year 2003. Upon accession of the new Member States to the Community on 1 May 2004 the quantitative limits will be reviewed.

This Council Decision will be automatically repealed when the new Agreement enters into force. Furthermore, the quantitative limits contained in this Decision would be reviewed if the Ukrainian tax on ferrous scrap exports is significantly decreased or lifted earlier than the entry into force of the new Agreement.

2003/0243 (ACC)

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, of the one part, and Ukraine, of the other part [1], provides in its Article 22 (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 European Coal and Steel Community (ECSC) and the Government of Ukraine on trade for certain steel products expired on 31 December 2001;

(3) The European Community 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 Community in the field of trade policy;

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

(5) Pending the signature and the entry into force of the new agreement, quantitative limits for the year 2004 should be established; these limits should be reviewed in the light of accession of new Member States to the Community on 1 May 2004;

(6) Given that the tax of 30 EUR/ tonne on exports of ferrous scrap applied as of 1 January 2003 has not been lifted nor diminished, it is appropriate to set the quantitative limits for the year 2004 at the same level as for the year 2003,

HAS DECIDED AS FOLLOWS:

Article 1

During the period 1 January to 31 December 2004, imports into the Community of steel products referred to in Annex I originating in Ukraine shall be subject to licensing.

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 II.

Licences shall be issued only within these limits.

Article 3

The rules for issuing licences and other relevant provisions shall be published in the Official Journal of the European Union.

Member States shall issue licences according to those rules 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 said agreement replace the provisions of this Decision.

Article 5

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

Done at Brussels,

For the Council

The President

ANNEX I

Products referred to in Article 1

>TABLE POSITION>

ANNEX II

Quantitative limits referred to in Article 2

(tonnes)

Products //

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SA. Flat products //

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SA1. Coils // 19 190

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SA2. Heavy plate // 73 444

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SA3. Other flat products // 5 926

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SB. Long products //

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SB1. Beams // 2 583

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SB2. Wire rod // 36 904

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SB3. Other long products // 46 499

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