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Russia threatens to target Ukraine steel
Journal Staff Report

MOSCOW, July 15 – Days after imposing restrictions on imports of meat and dairy, Russia warned Ukraine it may also target the steel sector, the backbone of its economy, unless Kiev joins a Moscow-led trade bloc.

Russian Prime Minister Vladimir Putin, addressing workers at a major Russian steel company on Friday, said the Ukrainian steel imports may be the subject of an anti-dumping investigation.

“Ukraine is, of course, a country with a developed steel sector, and without any doubts, it is your competitor,” Putin told Magnitogorsky Steel workers, according to a report by the Russian government press service.

“We don’t know whether Ukraine is going to join the Customs Union. The Ukrainian leadership, as far as I can understand, does not have such plans,” Putin said.

“What does this mean? This means that the three countries - Russia, Belarus and Kazakhstan – will be see how to protect its domestic markets,” Putin said. “An agreement on using different forms and methods of protection has been already approved.”

The comment comes at a sensitive time as Ukraine has been holding talks with the European Union seeking to sign the free trade agreement before the end of the year.

Putin, as well as Russian President Dmitry Medvedev, repeatedly said that Moscow would unleash trade sanctions against Ukrainian goods in the event of Kiev signing the EU free trade accord.

Instead, the Russian leaders have argued that Kiev should join the Customs Union, the trade bloc that includes Russia, Belarus and Kazakhstan.

The latest threat to target the steel sector is the most serious trade measure so far that has been threatened against Ukraine. The steel sector is the backbone of the Ukrainian economy and is responsible for up to 40% of the country’s exports earning.

Any restrictions on imports of Ukrainian steel and steel products may have far reaching consequences from increasing downward pressure on the Ukrainian currency, the hryvnia, to potentially forcing the central bank to increase interest rates that may slow down the economy.

Putin indicated that should Kiev reverse its foreign policy and stop negotiations with the EU, while at the same time accepting the joining of the Customs Union would benefit Ukraine’s steel sector.

“If Ukraine decides to join the Customs Union, it of course would increase competition on the steel market [of the trade bloc], as well as in some other sectors,” Putin said. “Let me stress again that the main thing is to make sure that all participants are in the same competitive conditions.”

The steel industry warning comes days after Russia has restricted imports of meat and dairy from most of Ukrainian companies, citing alleged failure to meet Russian quality standards.

The ban affects supplies to Russia, Belarus and Kazaklhstan and shuts the imports of meat and dairy products from 28 Ukrainian companies allegedly for failing to meet “veterinary and sanitation norms,” Rosselkhoznadzor, a Russian agriculture regulator, reported in a statement. Only three Ukrainian producers have been allowed to temporarily continue the exports.

A Russian official said that the ban may be lifted within a month if Ukrainian companies move quickly to improve their production standards.

The pressure on Ukraine has been rising persistently over the past six months, and follows earlier restrictions imposed by Russia on imports of sugar, buckwheat, potatoes and caramel. (tl/ez)




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