Slovakia turns down EC proposal on US Steel overproduction

US Steel Košice can continue increasing its steel production until 2009 based on its agreement with the Slovak government, which has turned down the European Commission proposal for the reduction of tax breaks and financial compensations for the steel producer, news wire SITA reported.

According to Deputy Prime Minister for European Integration Pál Csáky, the
proposed "level of compensation was too tough”.

The negotiations with the EC will continue through January. If no agreement is reached, the issue will be dragged to a court.

Slovakia, in its negotiations with the EU, agreed to limit the growth of steel production to three percent over the production of 2001, when USSK produced 4.05 million tonnes of steel. In 2002 the production rose by eight percent to 4.392 million tonnes; in 2003 it should reach 5 million tonnes.

USSK had been promised tax breaks until 2009.

The problem resulted from a misinterpretation of the part of the Slovakia-EU accession treaty pertaining to steel production.

According to USSK President Christopher Navetta, the Slovak government had initially pledged that all limitations concerning the growth of USSK steel production would become effective only after the country becomes a member of the EU, scheduled for May 1, 2004.

However, in May 2003, the government disclosed that problems might emerge concerning steel overproduction even before the country's accession.

In its last progress report, the EC listed steel overproduction as one of the four most problematic issues continuing to burden the country prior to its accession.

Compiled by Beata Balogová from press reports
The Slovak Spectator cannot vouch for the accuracy of the information presented in its Flash News postings.

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