Moscow-led Customs Union extends import duties for Ukraine pipes

Макроэкономика 13.10.2015 The Eurasian Economic Commission (EEC), the international trade regulatory body for the member-states of the Moscow-led Customs Union, published on Oct. 12 its decision to extend import duties for seamless steel pipes produced in Ukraine from Nov. 18, 2015 to July 5, 2016. The commission reaffirmed the rates of import duties for well-casing pipes from Ukraine at 18.9%, for oil-well pipes at 19.9% and pipes for oil pipelines at 19.4%. On top of that, the Commission reaffirmed a special 37.8% import duty for the Dnipropetrovsk Tube Plant, part of Industrial Union of Donbas, which is controlled by Russian investors. Roman Topolyuk: The approved extension of import duties for Ukrainain pipes for a period less than year indicates that the decision of the Eurasian Economic Commission was not prepared with much detail and it is preliminary. We expect that once the new duties expire in July 2016, a set of new import barriers will be imposed, as the commission has adopted a consistent policy of limiting Ukrainian pipe producers’ access to the Customs Union market. In our view, the existence of these import duties will have a neutral effect on the performance of Ukrainian biggest pipe producer, Interpipe (INPIP), which used to be the largest supplier to the Russian market before July 2013. Firstly, its supplies to this market have declined significantly already. Interpipe sold only 9% of its pipes to Russia in 1H15 and is planning to further minimize exposure to this market, while it usually allocated around a third of its products to Russia previously. Secondly, the steep ruble devaluation has made sales to Russia unprofitable.