EoW September 2012

Transatlantic cable

† At this stage not much is clear except that the stando will likely produce a clash of titans, and that Severstal will be a nimble-footed one. Business Insider recalled that Severstal has switched its trade tactics towards the US more than once over the years. The company’s owner, Alexei Mordashov, most recently “changed tack” when Russia achieved market economy status – as de ned by Washington. Mr Helmer concluded: “In February, trade o cials for the US and Russian governments started new negotiations on their issues in Washington. The talks are continuing, with a deadline for revising the terms of their steel trade by late September, a few weeks before the American elections.”

† The Chinese tari s on the steel imported from the US, which AK Steel said amounted to about 19.5 per cent on its products, will remain in force pending China’s appeal from the WTO decision. While a rming that right of appeal, Mr Reif had an interim suggestion for Beijing: that it “take on board the [WTO panel’s ruling] and comply promptly.”

In Washington, Russia’s Severstal and Nucor lock horns over the alleged

dumping of hot-rolled steel in the US market Its victory over China in the matter of electrical steel exports (See “World Trade Organization,” previous page) may have to serve the US steel industry with all the exultation it is going to enjoy for a while. Another international trade dispute – the rst involving Russian exports since Russia was accepted into the WTO late last year – is looming in the International Trade Administration (ITA), with potential to create considerable turbulence. The ITA is an agency of the US Department of Commerce with a mission to safeguard American companies from unfair competition. In response to a request from Nucor Corp (Charlotte, North Carolina) the ITA is looking into the claim that Severstal, the largest steel company in Russia, dumped “hot-rolled at-rolled carbon-quality steel product” in the American market. Alan Price, the Washington attorney for Nucor, the largest US mini-mill operator, has said he expects to achieve penalty import duties against several categories of hot-rolled steel from Russia of between 78 per cent and 180 per cent. This would be su cient to kill the trade, which in 2011 generated 5.7 million metric tons of Russian exports to the US, worth $3.8 billion. As noted in Business Insider by John Helmer, widely known as the foreign correspondent with the longest continuous service in Russia, Nucor’s claim for penalties against the Russian imports is based on a 15-year old calculation of Russian steel manufacturing costs and prices. Writing from Moscow, he explained that, because Russia’s economy was classi ed as a “non-market economy” at the time, the calculation by the Department of Commerce was not made on the basis of direct Russian evidence. (“Who’s for Competition in This Steel Trade Contest?”, 10 th June). In such cases, US trade law permitted data for costs and pro ts to be taken from a surrogate-country steelmaker, applied to the “non-market economy” steelmaker, then used to estimate a dumping margin and thus inform the penalty duties. The American case against Russian steel was based on price data generated between 1996 and 1999 – in Brazil. “Nucor’s case is thus based on a technicality of US trade law which its lawyer argues the Russians have been taking advantage of,” Mr Helmer wrote. “According to Mr Price, Nucor wants to swing the technicalities vice versa.” In response to the American claims, the Russian steel industry association Russkaya Stal said that there has been no violation of the trade agreement that has been in place since 1999; no evidence of unlawful price competition in the US market by Russian hot-rolled steel; and no justi cation in US trade law for the import penalties and deal breakers Nucor would like to see.

Telecom

Europe’s operators complain to the UN that American content providers are free-loading on the world’s bandwidth

A group representing 35 European telecommunications companies wants to charge US-based Internet giants like Facebook, Google and Net ix a bandwidth fee for the privilege of servicing their own users in Europe. The Brussels-based European Telecommunications Network Operators Association (ETNO) submitted a proposal to the International Telecommunication Union (ITU), the specialised Geneva-based United Nations agency, calling for a levy on American sites and providers reaching out to their customers outside of the United States. Condensing a report developed by CNET (7 th June) from ETNO documents, Rawiya Kameirif of ITProPortal wrote that the leaked materials add context to long-running complaints from European telecoms that American content providers consume global bandwidth “for free.” The principle being urged by ETNO – that “the sending party [network] pays” – would oblige US content providers to pay a per-minute price, as determined by the user’s network operator, to reach non-US customers. The UN has previously contemplated various forms of “Internet taxes” but not implemented any of them. While it is unclear whether this latest proposal has real prospects, it is nonetheless highly controversial. Ms Kameirif wrote: “Some experts have expressed fears that, while it could prove to be a boon for governments looking for additional forms of revenue, a tax of this nature could serve to isolate people around the globe.” Sally Shipman Wentworth, senior manager for public policy at the Internet Society (Reston, Virginia) is among those in opposition. Pronouncing the ETNO proposal “extremely worrisome,” she declared that it could create “an enormous amount” of legal uncertainty and commercial uncertainty. CNET’s Declan McCullagh and Larry Downes also mentioned concerns raised by the Obama administration and members of Congress “about a radical re-engineering of the Internet ecosystem,” allowing governments to monitor or restrict their citizens’ online activities. † According to the CNET reporters, the leaked documents were posted by the website WCITLeaks, created by two policy analysts at the free-market Mercatus Center at George Mason University in Arlington, Virginia.

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September 2012