US STEEL Košice (USSK) can continue increasing its steel production until 2009 based on its agreement with the Slovak government, which has turned down the European Commission (EC) proposal for the reduction of tax breaks and financial compensations for the steel producer, the SITA news wire reported.
According to Deputy Prime Minister for European Integration Pál Csáky, Slovakia rejected the EC proposal because its proposed "level of compensation was too tough".
Negotiations with the EC will continue through January. If no agreement is reached, the issue may be taken to court.
In negotiations with the EU, Slovakia agreed to limit the growth of steel production to 3 percent more than the 2001 production level, when USSK produced 4.05 million tonnes of steel. In 2002 production rose by 8 percent to 4.392 million tonnes and in 2003 it should reach 5 million tonnes.The USSK has 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.
USSK President Christopher Navetta thinks that 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.
22. Dec 2003 at 0:00 | From press reports