What do nonalcoholic beverages, gaskets and dog leashes have in common?
They are all Ukrainian-made products newly subject to U.S. import charges, after U. S. President Donald Trump issued an order in May rescinding 155 goods from tariffs.
Ukrainian officials are downplaying the move, however, even as they scramble to Washington, D.C., to reverse additional, separate tariffs issued in May on the import of Ukrainian steel and aluminum.
“We had a number of meetings in Washington in order to discuss this,” said Ukraine’s Trade Representative Nataliya Mykolska. “There will be one more round of discussions, the idea is that we believe that Ukrainian steel products and aluminum products are not harming U.S. industry.”
The steel fight has also seen a Ukrainian metallurgical association hire a D.C. lobbyist and hold additional meetings in Washington over the matter.
“I’m not saying that what’s going has affected our relations with the U.S,” Mykolska emphasized. “We have very sound ground and foundations, and for us it’s important to discuss and have a dialogue on all issues like that.”
Steel
By far the hardest-hit sector is Ukraine’s steel industry.
The United States is far more important to Ukraine’s steel producers than Ukraine is to the U.S. steel market, Mykolska and others argue.
Pig iron and seamless iron tubes and pipes made up 21 percent of Ukraine’s $828 million worth of exports to the United States in 2017, according to Ukraine’s State Statistics Service and Economy Ministry.
But of the entire volume of foreign steel imports to the U.S. market, Ukraine accounts for 0.3 percent.
“It’s a traditional market for us,” Mykolska said. “But (our steel imports) are already limited by suspension agreements under the anti-dumping duties being enforced by the U.S.”
UkrMetalurgProm, an industry association that represents the interests of three oligarchs — Rinat Akhmetov’s Metinvest, Viktor Pinchuk’s Interpipe, and Kostyantyn Zhevago’s Ferrexpo — went to Washington in May for meetings on the tariffs.
UkrMetalurgProm Chief Oleksandr Kalenkov told the Kyiv Post in May that he had hired Washington lobbyist Livingstone Group from May through July to push back against the tariffs.
The 25 percent tariffs on Ukraine’s steel imports destroy the country’s competitive advantage, he said.
“It’s a big problem for us,” he said. “For some added value products like pipes, there’s a significant share of exports to the United States.”
Concorde Capital Analyst Dmytro Khoroshun wrote in a research note that Pinchuk’s Interpipe would likely be hit the hardest by the move.
Mykolska declined to comment on the content of the meetings, and said that there was no fixed date on whether Ukraine would receive a waiver for the tariffs.
“There is no formal procedure on country exclusion, all is on a case by case basis,” she said, but argued that U.S. willingness to at least meet with Ukrainian officials on the issue could be a sign of progress.
“The level of dialogue keeps us optimistic in terms of being able to get some improvement of the current trading regime,” she said.
Intellectual property
May also saw the Trump administration remove 155 types of Ukraine-produced goods from the non-tariff favored nation trading status.
But the decision does not mean that Ukraine has been removed from the U. S. Generalized System of Preferences, which allows 3,500 Ukrainian goods to be sold to the United States without import tariffs.
Mykolska attributed the decision to concerns over intellectual property rights.
“It was based on U.S. concern about the level of intellectual property rights protection in Ukraine,” she said.
Omar Cardentey, deputy press person of the U.S. embassy in Kyiv, also blamed the suspension of preferential duties due to poor protection of property rights in the country.
“Ukraine was given a 120-day grace period from the date of the proclamation to address the intellectual property rights concerns, and we will continue to engage with Ukraine intensively on these issues,” Cardentey told the Kyiv Post back in May.
The goods on the list include food products, clothing, light industry, woodcutting machines, electronics, and machine tools.
Various goods on the list now face different tariffs. Nuts, for example, have the highest at 17.9 percent, while the average tariff is 4 percent.
Trump sent the U. S. Congress a letter in December 2017 informing the body of his “intent to suspend the duty-free treatment” of certain goods due to a lack of “adequate and effective protection of intellectual property rights,” giving Ukraine 120 days — until May 2018 — to pass legislation on the issue.
Mykolska said that the adoption of a law on collective ownership rights of intellectual property would be necessary to remove the import duties. But a draft law on the issue stalled in Ukraine’s parliament after its first reading.
Other bills strengthening the country’s trademark regime and geographic origin of brands have also foundered in parliament.
“We need these (bills) to receive a positive reception from the United States in order to receive the renewal (of preferential duties),” Mykolska said. n
