Parliament supports president`s amendments to law raising export duty on scrap

Thursday, July 14, 2016 - 12:28 (EEST) Section: Latest news

The Verkhovna Rada of Ukraine has adopted a bill, as amended by the Ukrainian president, calling for an increase of up to EUR 30 per tonne, for the period of one year, in the export duty on waste and scrap ferrous metals, as well as the abolition of mandatory state registration of contracts on scrap metal exports.
The law ”On amendments to some laws of Ukraine regarding the reduction of ferrous scrap shortages in the domestic market to ensure priority needs of the defense industry and the restoration of infrastructure,” was supported by 248 votes, with the required minimum of 226 votes.
Deputy Minister of Economic Development and Trade Maksym Nefyodov said, when presenting bill No. 3868, that Ukrainian President Petro Poroshenko did not sign the draft bill after its adoption by parliament on April 22 this year, since he believed the draft law did not comply with Ukraine`s commitments under an agreement with the World Trade Organization.
Nefyodov added that the president proposed to permanently maintain a provision regarding the abolition of the registration of scrap metal export contracts, despite earlier proposals to abolish it for a three-year period. At this, it is proposed that the increase in the rate of export duty for scrap should be put in place for a period of one year, instead of three years as earlier suggested. Chief of the Verkhovna Rada Committee on Industrial Policy and Entrepreneurship Viktor Galasyuk said, when presenting the bill, that by adopting the document earlier, Ukrainian MPs were seeking to support domestic steel producers, and described the president`s position as being uncompromising.
Having analyzed the president`s amendments, the Verkhovna Rada Committee saw no option but to agree with the proposed amendments, according to Galasyuk. During the previous consideration of the bill in April this year, MP Yuriy Levchenko (All-Ukrainian Union Svoboda) said the law aimed at supporting the country`s metallurgical industry, though that would imply the support of only two players in the sector.
”Our metallurgical sector is a private monopoly, an oligopoly, to be precise. There are two main competitors, who agreed among themselves as a cartel and artificially maintain the market,” Levchenko said. He added that the changes envisaged by the bill would have no positive effect for the employees of these companies or the budget, in terms of tax revenues.
As UNIAN reported earlier, Ukrainian metallurgical companies have repeatedly made demands to limit the export of scrap metal because, they claimed, domestic metallurgical companies were facing shortages of the raw material, while its export impacted the development of the country`s steel industry. According to Galasyuk, over the past few years Ukraine saw a significant reduction in scrap metal collections (4.2 million tonnes, a 20% decline), while its exports grew notably – 1.2 million tonnes (against 300,000 tonnes in 2011). The deputy noted that in such circumstances it is necessary to enable domestic steel enterprises in Ukraine to continue stable operations by supplying them with domestic raw materials. At this, scrap collecting companies stated that steelmakers were lobbying for export restrictions and an increase in export duties for scrap metal, to allow for the purchase of raw materials at prices significantly lower than seen on the market.
According to experts of state enterprise Ukrpromzovnishexpertyza, the collection of scrap metal in Ukraine in January-February of this year decreased by 40%, compared with November-December last year, to 359,000 tonnes, due to low purchasing prices offered by domestic steel makers, as well as the lack of export quotas for scrap collectors.