The budget funds earlier provided to Arcelor Mittal may be withdrawn, Vice-Minister of National Economy of Kazakhstan Bauyrzhan Bekeshev said during the enlarged meeting of the Committee for Economic Policy, Innovative Development and Entrepreneurship of the Senate.
The topic of the discussion was the bill on “Ratification of the agreement of voluntary reconciliation between the Eurasian Economic Union member countries and the Eurasian Economic Commission of specific subsidies in respect of industrial goods and conduction of investigations by the Eurasian Economic Commission associated with provision of specific subsidies by EAEU member countries”.
“There is an investigation ongoing in respect of Arcelor Mittal. The Russian party doesn’t have the right to receive these funds from us, but they have the right to require us to take compensation measures. If they prove it and we acknowledge the claim, we will have to withdraw from Arcelor Mittal the entire amount during that period cum 1.5% refinancing rate. This money will go to our state budget,” said Bekeshev answering the deputies’ questions.
The deputies expressed concern regarding Russia’s claims against Arcelor Mittal for not receiving revenues due to the supplies subsidized by this company to the Russian Federation. This concerns $800 million. Vice-minister explained that after the mentioned agreement came into force no compensation measures would be taken – only cancellation of subsidizing would be considered. Bauyrzhan Bekeshev mentioned in his report that the Agreement provided for 15 criteria of admissibility of subsidies. If subsidies correspond to one or several criteria established by the Commission, a decision will be made to concert such subsidy. The admissible subsidies are as follows: subsidies of low significance – up to $100 thousand for one company; subsidies designated for implementation of a joint project of making goods outside the EAEU territory; subsidies for conduction of scientific, research and design work, including joint projects aimed at stimulation of high technology productions; subsidies for innovation activity. Subsidies are considered admissible if serve as support for a bankrupt company, help in payment of consulting services, organization of participation in trade shows and conduction of fundamental research. If the purpose of a subsidy is to confirm conformance of goods with international standards it implies compensation of half a cost. Prohibited subsidies are the ones, which are associated with export of products and import substitution. This is in line with the rules of the World Trade Organization (WTO).
According to Bekeshev, the Agreement provides for an advantage: if a company, which had received a subsidy, in the opinion of the other party, caused damage to the economy of the latter, the affected party had the right for compensation measures. The money withdrawn is returned to the state budget. Such a measure is supposed to equalize competition in this kind of product. After the Agreement comes into force, compensation measure will not be applied. If a party acknowledges that the subsidy was used to cause damage, cancellation of subsidy would be enough. As for the investigation procedure, according to the minister, the EAEU countries have the right for conduction of investigations independently. However there is a subjective factor present, because the interested party is the sole party, which conducts the investigation and makes a decision if damage was cause or not. After the Agreement comes into force, investigations will be conducted upon the statement of the Government on the Commission venue. The Commission will act as an independent judge. This will ensure fair consideration of disputes. The agreement has been prepared for implementation of the Eurasian Economic Union Agreement and signed on May 26, 2017 at the meeting of the Eurasian Intergovernmental Council. (Kazinform/Ukrainian metal)