If Russia does not make everything worse, it will be better for Russia

The American government made the decision to introduce increased tariffs on steel imports. The new duties will be 40%, as was expected before, but between 8 and 30%, depending on the kind of production. Nevertheless, steel importers are not reassured. However, the new rule will not embrace all countries. The USA’s neighbors, Mexico and Canada, will be deprived of the opportunity to experience the fascination of new tariffs. Israel and Jordan are on the happy list as well, and it is not hard to guess the reason why. They are the USA's closest partners in the Middle East. Argentina is also on the list, which has been suffering for several months from the consequences of an economic crisis.

The bad luck comes to Brazil, Japan, Ukraine, Russia, South Africa, and South Korea. The European Union is not happy either, and it is firmly determined to go to the WTO and complain of America’s actions. However, the offended countries have not made any certain steps in that direction yet. Time is needed to get ready for such an action. In fact, how can the interested states exert influence on America in this respect?

Russia managed to tease the interests of the American producers, having banned the import of poultry from the USA. This caused a very big concern for American officials. Robert Zoellick, a representative of the American president, told Russian Ambassador Yury Ushakov last week that he was trying to work with the US Congress in order to cancel an amendment to the American Constitution that was put in effect in the 1970s. This amendment still has a negative influence on the trade relations between Russia and the USA. Robert Zoellick said that if Russia's decision remains in place, then he did not see a way to cancel the amendment. The American representative did not stop with that. He believes that the increase of the customs duties on steel may help Russian exports to the USA (What?). However, he added the it will be hard for the USA to implement the program regarding Russian steel imports if Russia does not make a responsible decision concerning poultry. If Russia does not make everything worse, it will be better for Russia itself. So Russia is guilty of everything, in other words, but then there is the question of what the ways out of the situation for the Russian enterprises are? There are not many of them, but there are some.

The companies that produce steel can deal with the development of metal works, manufacturing more complicated productions. Furthermore, Russian enterprises will surely pay attention to other markets, in Asian countries first and foremost. There is tough competition there, but one may try; it’s worth it.

The Ukrainian metallurgists will suffer most from the introduction of the increased tariffs. Their opportunities cannot be compared with those of Russian companies. Moreover, the USA has already restricted the steel imports from Ukraine before. There is nothing left for the Ukrainian companies to do but to look for other markets. It is not ruled out that they will sell their steel products at lowered prices (on the Russian market too).

The interests of the German and Japanese steel manufacturers will suffer a lot too, but they have larger opportunities to stand up for their interests. The Financial Times Deutschland wrote that the German steel concern Thyssen Krupp Steel counted on its long-standing links with the automobile giant DaimlerChrysler. The European Union is also likely to help. Anyway, even if the claim that is going to be submitted to the WTO is allowed, this will not be a reason for Washington to cancel the increased tariffs. When it comes to the interests of the American industry, no decrees from the WTO will be helpful.

However, the Europeans will most likely do their best to bring the presence of the American steel companies on the European market to a minimum. They can accomplish this. As a matter of fact, almost all experts think that the problems of the American steel manufacturers didn't pop up today came up and they are not the result of competition with the foreign steel producers. Old equipment, excessive production capacities, unwillingness to join into bigger companies - these are some of the reasons for the crisis of the American companies. It is needless to mention that the structural reforms in the American steel industry will lead to an abrupt reduction of personnel. The American companies are currently facing this issue. The steel lobby was hoping for support when they were voting for Bush. Here it comes, not as it was expected, but it comes anyway.

Increasing the tariffs is a double-edged sword. It is not a fact that the protective measures of the American government will exert a positive influence on those branches of the American industry that consume steel. Increasing tariffs will not help to solve the major problems of American companies. They have to make everything in order within themselves in order to be able to succeed in competition without twisting the arms of their foreign competitors with the use of the methods that are far from being market methods.

Oleg Artyukov PRAVDA.Ru

Translated by Dmitry Sudakov