Ukrainian companies have the right to review US trade restrictions

The share of American iron & steel imports is less than 1%, and even an increase in supply volumes cannot harm local producers

Stanislav Zinchenko’s speech during the Ukraine-USA telebridge «Elections in the USA and the future of Ukraine» as part of the panel «Strategic partnership: the possibility of deepening economic cooperation».

Ukraine was and remains a beneficial trade partner for the United States – our country imports many times more than it exports. In particular, last year Ukraine imported goods worth $2.8 bln, while it exported $500 mln. The United States is an important supplier of technologies, high value-added products, and energy resources. These supplies help Ukraine survive in the war and maintain the basic life infrastructure during this difficult time.

Ukrainian exports to the USA is represented mainly by iron & steel products, in particular pig iron and pipes. Compared to pre-war 2021, Ukrainian exports of iron & steel products to the USA decreased by 83% last year. Such a significant drop is associated with the loss of steel capacities during the war – two enterprises (“Azovstal” and «Ilyich Iron and Steel Works») were destroyed. In general, the production of pig iron and steel in Ukraine fell more than 3 times compared to the pre-war period.

Why are we now talking about the importance of exporting iron & steel products? The iron & steel sector is a basic branch of the Ukrainian economy – according to our calculations, its contribution to GDP was 5.7% last year. The share of the sector in the export of goods is 14.6%. Exports allow steel companies to maintain employment, continue to invest and develop production. When the Ukrainian economy is exhausted by the war, and the aggressor continues to destroy production assets in Ukraine, it is critical to support the basic (fundamental) sectors of the economy.

After the start of the war, developed countries began to abolish trade restrictions on Ukrainian imports. In May 2022, the US eliminated a 25% safeguard tariff on steel imports (known as Section 232). We are grateful to the United States for this step, as well as for all the support it provides to Ukraine during the war. However, the abolition of the 25% duty cannot be considered a sufficient step in trade liberalization – the import of steel products from Ukraine to the United States remains blocked due to US anti-dumping duties, which cover almost the entire range of steel products.

It seems quite strange when the USA applies the same restrictive measures to Ukraine, which is US political ally, as it does to unfriendly countries. In particular, the duty on ferrosilicomanganese for Ukraine is 163%, and for China – 150%. The duty on hot-rolled coils for Ukraine is 90.33%, and for China – 90.83%.

Some anti-dumping duties were introduced 27-30 years ago. For example, on ferrosilicomanganese, flat carbon hot-rolled products (not in coils). Ukrainian companies have already suffered losses due to their aggressive trade in the US, and the Ukrainian economy has suffered losses in decreasing exports and a drop in GDP. After years of restrictions, Ukrainian companies have the right to review the terms of trade, and the Ukrainian economy and citizens have the right to return the opportunity to receive income from exports to the United States.

Especially since Ukraine does not pose a threat to the USA market. The share of Ukraine in US imports of iron & steel products is less than 1%, and even an increase in the supplies due to the abolition of anti-dumping duties is not capable of harming US producers. Given the significant losses of steel capacities (about 40%), today Ukraine cannot be considered as a country with excessive capacities. We do not currently produce a full range of products even to fully satisfy our own needs.

We believe that the USA is primarily interested in ensuring that the Ukrainian economy does not default, and that Ukraine does not end up in economic and political crisis. On the contrary, the US will receive certain political and financial benefits if the Ukrainian economy is strong and reducing its dependence on donor funds (including from the US budget and US taxpayers), if ultimately Ukraine uses its own resources to develop its economy.