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The Steel Federation > Steel Industry > Steel industry in the CR > Relations with the European Union

Relations with the European Union

Relations with the European Union have passed through a complicated development and should be divided into several stages different in time. Before 1989, quantitative limitations were applied to export of certain products from the former Czechoslovak Socialist Republic. In the case of steel products, the so-called autolimitation agreements were applied because the member countries of European Community considered these products especially sensitive. These agreements aimed at regulation of trade flow of sensitive products and replacement of conventional qualitative limitations which are no longer considered legal from the principles of ”General Agreement on Tariffs and Trade” (GATT). Their substance was that the producing countries undertook voluntarily to adhere to agreed quantitative limits of export of the products in question from the viewpoint of the so-called traditional flows, and the import countries undertook to enable exports in the volume agreed in such a manner.

 

Due to political and social changes in all countries of Central and Eastern Europe after 1989 the relation between these countries and the European Community changed. Manifestation of these changes were the ”European agreements” about association with the EC between Czechoslovakia, Poland and Hungary on the one hand and European communities on the other hand which took place in December 1991. These agreements implied for these countries the possibility of sequential engaging in the free flow of goods, services and capital. They also contained regulations of political dialogue, economic, cultural and financial co-operation.

 

Ratification of the European Agreement had to pass through complicated procedures and was, in addition, held up owing to the partition of the Czechoslovak Federative Republic. Therefore, the so-called Interim Agreement on trade and questions also relating to trade between the CSFR, the European Economic Community and the European Coal and Steel Community containing passages referring to mutual trade has been at the same time prepared. In this way, a new relationship between the Czechoslovak Federative Republic and EC in trade co-operation could proceed. The agreement envisaged formation of a free trade zone between the Czechoslovak Federative Republic and the EC within 10 years. It had a preferential character and was asymmetric in favour of the Czechoslovak Federative Republic. Its regulations were fully in compliance with GATT regulations.

 

In consequence of the disintegration of eastern markets and a decrease in domestic consumption and liberalisation of foreign trade activity in the Czechoslovak Federative Republic, a large increase of export of the Czechoslovak metallurgical plants to EC markets occurred as early as the beginning of 1992. This situation raised negative attitudes of some member countries of EC, especially Germany, France and Italy, the main destination countries of the increased Czechoslovak export. This increased Czechoslovak export was enabled due to the competitive ability of Czechoslovak metallurgical products thanks to the comparative advantages of domestic metallurgy.

 

Export volumes of selected groups of rolled material and steel tubes to EU:
(In 1,000 t)
Year 1993 1994 1995 1996 1997
Export of selected groups of flat products to EU ”15” 230,0 339,7 289,2 317,6 463,8
Export of selected groups of long products to EU ”15” 476,6 651,1 684,0 619,4 566,4
Export of seamless steel tubes to EU ”15” 32,4 76,0 70,0 95,8 85,5
Export of welded steel tubes to EU ”15” 69,6 106,2 101,3 93,6 106,8

 

 

In August 1992, the EC Commission promulgated recommendations for some member states to apply restrictive measures in the area of Czechoslovak exports of some sensitive items - particularly flat products, wire rod and steel tubes were involved.

 

In November 1992, the EC Commission issued a regulation imposing temporary antidumping customs duties amounting 12-49 % for import of selected items of steel seamless tubes manufactured in the Czechoslovak Federative Republic, Hungary, Poland and Croatia which practically made the export of seamless tubes to the EC impossible. Since 1993, the Czech Republic and the Slovak Republic were excempted from these measures, the possibility to deliver steel tubes to the EC was renewed but the so-called tariff quotas were imposed on selected metallurgical products. For the Czech Republic, the following items were involved: cold-rolled sheet, wire rod, hot-rolled strip, seamless tubes and welded tubes and since Autumn 1994 also certain sorts of sheets produced in a four-high rolling mill.

 

The schedule of tariff quotas continued even after January 1, 1995 after accession of Austria, Finland and Sweden to EU (successor of EC) and the tariff quotas were revised. Since January 1, 1996, the schedule of tariff quotas was abolished and by mutual agreement replaced the double-checking system. This was a voluntary obligation of the Czech Republic which quieted to a certain extent the corresponding steel federations of EU associated in EUROFER trying to prevent a potential rapid growth in import from the Czech Republic. Therefore, the metallurgical companies in the Czech Republic suggested to include for 1996 into this those products on which the tariff quotas had been imposed until now as well as those products where antidumping investigation of import was suggested to be initiated or already instituted. It should be stated in the interests of objectivity that since admission of the joint-stock companies Nová hut, Trinecké zelezárny, VÍTKOVICE, VSZ Košice and Hutnictví zeleza, a.s. as associated members of EUROFER in November 1995, the disputable problems with this association in steel trade are, for the time being, well solved by negotiations. The double-checking system did not, however, prevent the initiation of a new antidumping investigation in export of seamless tubes in spite of the admission of the Association of Steel Tube Manufacturers of the Czech Republic and the Slovak Republic (AVOT) in February 1996 as an associated member of the European Association of Steel Tube Manufacturers (ESTA). Therefore, the Czech party suggested for 1997 to except seamless tubes from the checking system which has been accepted by the EU Commission.

 

Import of selected groups of metallurgical material from EU ”15” to the Czech Republic
In 1,000 t
Year 1993 1994 1995 1996 1997
Import of selected groups of flat products from EU ”15”65,248,189,8239,6305,7
Import of selected groups of long products from EU ”15”12,522,934,286,2116,3
Import of seamless steel tubes from EU ”15”4,28,515,128,433,7
Import of welded steel tubes from EU ”15”6,433,955,970,587,6

 

 

As to antidumping investigations, the present state is as follows:

  • At present, antidumping investigation in export of selected sorts of steel sections - I-iron and U-iron with height over 80 mm (initiated in July1995) has been officially finished.
  • Antidumping investigation in export of foundry pig iron (initiated in May 1994) has been finished by an acceptance of price commitment of the manufacturer.
  • In November 1997, the EU committee decided to apply a duty of 5.1% for Nová Hut, a.s. and Vítkovice, a.s. and 28.6% for VT Chomutov on selected items of seamless steel tubes.