Alexei Mordashov's Severstal, which placed about 340,000 tons of steel for $ 157 million in the US in 2017, is trying to challenge the country's application of import duties on steel (25%), which took effect on March 23. The company filed a lawsuit against the US government in the US Court of International Trade, demanding to withdraw its deliveries from duties and saying "irreparable damage" to its trading Severstal Export Miami Corp. NLMK will also seek an exception for the import of slabs to its assets in the US.
Subsidiaries Severstal Severstal Export Miami Corp and Severstal Export GmbH on March 22 filed a lawsuit against the US government in the US Court of International Trade, challenging the law of the introduction of the country's duties on steel (25%) under the protection of national security under Art. 232 Law on the expansion of trade, reported the American Metal Market (AMM) with reference to the materials of the case. The court session is scheduled for March 29.
If Severstal Export Miami pays fees on steel hire, which is already "on the water" and is waiting for registration of import procedures, the company faces bankruptcy, the suit says. These volumes have already been contracted and manufactured for certain buyers, so simply redirecting them will not be easy, AMM's statement of the company, which the law firm Thompson Hine LLP represents in court, quotes. "Severstal" demands the immediate exclusion of its companies from the effect of duties, declaring "irreparable damage" to them. The company asks the court to take a decision on interim measures in 14 days.
The suit also states that Donald Trump exceeded the powers that vest his art. 232, and the decree on imposing duties on steel is not only a "political step" that follows from the main messages of his presidential campaign, but also a lever in other trade negotiations.
Severstal was told by Kommersant that the US is not one of the company's priority markets, in 2017, the US accounted for only about 2% of its sales in money (about $ 157 million - Kommersant) and 4% in volumes (about 340 thousand tons - "Kommersant"), and "the company will be able to redirect these volumes to other markets." But they noted that Severstal "always defends its interests in the framework of international law, even if it is a non-priority market." "In our opinion, the decision under Art. 232 is a gross violation of international norms and laws of the United States, and the statement that the import of steel products in the US is a threat to the national security of the country on which it is based is completely untrue, "say Severstal. They add that the application of such restrictions by other countries "can provoke large-scale trade wars and will endanger the destruction of the current system of regulation of world trade within the WTO."
American lawyers, whose words are quoted by AMM, believe that the dispute will not be easy, because "irreparable damage" is difficult to qualify within the court, it is difficult to prove damage only from the introduction of the tariff, and art. 232 gives the US president broad powers on matters of national security.
Also AMM cites the words of the executive vice president of NLMK USA, the American division of NLMK, James Bunker-ml. that the company will seek to eliminate the slabs supplied to its rolling plants slabs - this is about 2 million tons per year and up to 90% is actually at the Novolipetsk Iron and Steel Works. NLMK confirmed the filing of an application to exclude slabs from the effect of duties.
In the decree of Donald Trump, it was noted that steel importers, who are residents of the United States, may demand an exception for certain products, the decision will be made after consideration of applications by the US government headed by Commerce Minister Wilbur Ross. One of Kommersant sources in the industry specifies that exceptions can only be made to steel processors, not just trade organizations, which explains the filing of the claim by Severstal.
The lawyer of CAF Group Julia Semenova believes that Severstal Export Miami Corp and Severstal Export GmbH have no real claim to the US government to recognize the illegal introduction of import duties on steel. "Subsidiaries of Severstal are unlikely to prove the excess of the US president's authority. The government will have enough to show in court statistical data on the growth of unemployment and the decline in metal production in the US, so that the court is convinced that the US economy in this industry harms the international trade regime in the former regime. From this point of view, the president's position is more evident, that is, the plaintiffs are unlikely to bring back the facts, "Ms Semenova argues.