WRITTEN QUESTION E-3000/02

by Sir Robert Atkins (PPE-DE), Guido Bodrato (PPE-DE)and Malcolm Harbour (PPE-DE) to the Commission

(23 October 2002)

Subject: Unfair competition on the market for aluminium scrap

The OEA (Organisation of European Aluminium Refiners and Remelters), an organisation representing 175 companies which produced a total of approximately 2 900 000 tonnes of aluminium in 2001, has drawn attention to the situation set out below. Aluminium scrap prices are more or less the same everywhere on the world market. However, Russia and Ukraine are out of step with the market price, given that in 2000 Ukraine imposed a total ban on exports of aluminium scrap and that Russia has steadily increased the duties it levies, thus making it impossible for European producers to obtain supplies on these markets. This situation is distorting competition: Ukrainian producers have a ready supply of cheap scrap on their domestic market and face no competition whatsoever, while the duty payable on imports into the EU of alloys produced in Russia and Ukraine stands at 6 %.

In view of the wholly justified concern expressed by the OEA, how does the Commission intend to put an end to this serious distortion of competition?

Would it not agree that it should propose that the barriers imposed by Russia (30 % duty) and Ukraine to trade in scrap should be removed, that the duty levied be brought into line with that in force for imports of finished products into the EU market (6 %) or even that, taking a leaf out of the USA's book, a 100 % levy should be imposed on imports of aluminium alloys for pressure die casting produced in Ukraine and Russia?

Answer given by Mr Lamy on behalf of the Commission

(23 December 2002)

The Commission shares the Honourable Members' concerns about distortions of competition caused by Russia's and Ukraine's restrictions on exports of non-ferrous scrap metal.

Initially set at 10 % in 1999, the Russian tax on exports of ferrous metals has been gradually raised and now stands at 50 %. The dissuasive level of this tax inevitably brought about a sharp reduction in Russian exports of scrap metal, thus refuting the budgetary argument put forward by the Russian authorities to justify the tax. As a result, Russian producers can get their secondary raw materials on the domestic market at prices well below the international market price. This advantage means that their semi-finished and finished products are very competitive on third-country markets.

The issue of Russian export taxes is a key point on the agenda of the bilateral trade discussions and was broached at the recent EU-Russia Cooperation Committee meeting in Brussels on 23 October. Elimination of those taxes is one of the Community's demands in the negotiations for Russia's accession to the WTO.

A similar situation obtains for Ukraine. Since August 2000 it has banned exports of non-ferrous scrap metal, ostensibly to combat criminal activity in its scrap metal sector.

The Commission considers that this Ukrainian measure, which is not accompanied by equivalent domestic measures, is a flagrant breach of the provisions of the bilateral Partnership and Cooperation Agreement.

In both cases, the Commission will defend Community interests as part of compliance with the undertakings made and, where appropriate, with the dispute settlement procedures set out in the partnership and cooperation agreements.

At this stage it cannot therefore go along with the suggestion by some operators that the Community should unilaterally impose additional customs duties over and above the existing 6 % tariff on imports of raw aluminium originating in Russia and Ukraine.