COMMISSION OF THE EUROPEAN COMMUNITIES 
COM(94) 517 final 
Brussels, 01.12.1994 
Proposal for a 
COUNCIL REGULATION (EC)' 
amending "the definitive anti-dumping measures applying to imports 
Into the Community of urea originating in the former USSR and 
terminating the anti-dumping measures applying to 
imports into the community of urea originating 
in the former Czechoslovakia 
(presented by the Commission) 
EXPLANATORY MEMORANDUM 
(1) By Regulation (EEC) N° 3339/871, the Council accepted undertakings in respect of 
imports of urea from, amongst others, the USSR and Czechoslovakia. By 
Commission Decision dated 21 February 19892, the undertakings accepted by 
Regulation (EEC) N° 3339/87 were confirmed. 
(2) During 1992, information available to the Commission indicated that the quantity of 
imports from these countries was significantly greater than the quantities provided 
for in the undertakings. Accordingly, the Commission considered a review of the 
measures was warranted and published a Notice of Initiation to this effect in the 
Official Journal of the European Communities3. 
(3) As the review proceeding was still in progress beyond the normal period of expiry 
of the measures, the Commission gave notice4 in accordance with Article 15(4) of 
Regulation (EEC) N° 2423/885 that the measures concerning urea originating in the 
former USSR and the former Czechoslovakia would remain in force after the end of 
the relevant five year period, pending the outcome of the review. 
(4) The countries concerned by this review are the new republics of the former 
Czechoslovakia (i.e. the Czech Republic and the Slovak Republic) and those 
republics of the former USSR in which there was reason to believe urea production 
facilities exist, namely the Republics of Belarus, Georgia, Tajikistan and Uzbekistan, 
the Russian Federation (referred to hereafter as "Russia") and Ukraine. 
(5) It was found that Georgia, Tajikistan and Uzbekistan had not exported any urea to 
the Community during the investigation period and that Belarus had only exported a 
tiny quantity. These countries were therefore excluded from the examination of 
dumping and injury. 
(6) Dumping margins were, however, established as follows for the other countries 
involved in this proceeding: 
Czech Republic 0.7% 
- Slovak Republic 11.8% 
Russia 28.2% 
Ukraine 20.4% 
In the case of the Czech Republic, the dumping margin found was considered to be 
'de-minimis' for the purposes of the present proceeding and therefore this country 
was also excluded from the examination of injury. 
^JN'T^n, 7.11.1987, p. 1 
2OJN°L52, 24.2.1989, p. 37 
3OJN°C87, 27.3.1993, p. 7 
4OJN°C47, 15.2.1994, p. 3 
5OJN°L209, 2.8.1988, p. 1 
4 .a 
(7) The investigation showed that the Community industry had suffered material injury 
and, with a view to establishing whether or not a causal link existed between this 
injury and the dumped imports from the countries concerned, careful account was 
taken of the volume of imports from these countries. 
(8) It was considered that regard need only be paid to the effect of dumped imports 
from Russia and, in this respect, a causal link was established between dumped 
imports from Russia and the material injury suffered by the Community industry. 
(9) With regard to the likelihood of injury being caused in the future by the countries 
concerned, only Russia was considered to pose a problem, therefore, anti-dumping 
measures are being proposed only for this country. Such measures are based on a 
level which would eliminate the injury suffered by the Community producers (which 
is lower than the dumping margin found) and take the form of a variable duty. This 
duty will be any difference between the actual CIF import price, free-at-Community 
frontier and a minimum price of 115 ECU per tonne. 
<\t> r 
Proposal for a 
COUNCIL REGULATION (EC) 
amending the definitive anti-dumping measures applying to imports 
into the Community of urea originating in the former USSR and 
terminating the anti-dumping measures applying to 
imports into the community of urea originating 
in the former Czechoslovakia 
THE COUNCIL OF THE EUROPEAN UNION, 
Having regard to the Treaty establishing the European Community, 
Having regard to Council Regulation (EEC) No. 2423/88 of 11 July 1988 
on protection against dumped or subsidised imports from countries not 
members of the European Union(1), and in particular Articles 12, 14 
and 15 thereof, 
Having regard to the proposal submitted by the commission after 
consultation within the Advisory committee, 
Whereas: 
(1) OJ No. L 209, 2.8.1988, p. .1. Regulation as last amended by 
Regulation (EC) No 522/â4 (OJ No L 66, 10.3.1994, P. 10) 
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A. PROCEDURE 
(1) By Regulation (EEC) No. 3339/87(2), the Council accepted 
undertakings in respect of imports of urea from, amongst others, 
the USSR and Czechoslovakia. 
(2) By Commission Decision (89/143/EEC) dated 21 February 1989(3), 
the undertakings accepted by Regulation (EEC) No. 3339/87 were 
confirmed. 
(3) During 1992, information available to the Commission indicated 
that the quantity of imports from these countries was 
significantly greater than the quantities provided for in the 
undertakings. Accordingly, the Commission considered a review of 
the measures was warranted and published a Notice of initiation 
to this effect in the Official Journal of the European 
Communities^). 
(4) As the review proceeding was still in progress beyond the normal 
period of expiry of the measures, the Commission gave notice^ ) 
in accordance with Article 15(4) of Regulation (EEC) No. 2423/88 
that the measures concerning urea originating in the former USSR 
and the former Czechoslovakia would remain in force after the end 
of the relevant five year period, pending the outcome of the 
review. 
(2) OJ No. L 317, 7.11.1987, p. 1 
(3) OJ No. L 52, 24.2.1989, p. 37 
(4) OJ No. C 87, 27.3.1993, p. 7 
(5) OJ UQ C 47, 15.2.1994, P.3 
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(5) The countries concerned by this review are the new republics of 
the former Czechoslovakia (i.e. the Czech Republic and the Slovak 
Republic) and those republics of the former USSR in which there 
was reason to believe urea production facilities exist, namely 
the Republics of Belarus, Georgia, Tajikistan and Uzbekistan, the 
Russian Federation (referred to hereafter as "Russia") and 
Ukraine. 
(6) The Commission officially notified the Community producers, 
exporters and importers known to be concerned and the 
representatives of the exporting countries of the initiation of 
the proceeding and gave the parties concerned the opportunity to 
make their views known in writing and to request a hearing. 
(7) Representatives of the European Fertiliser Manufacturers 
Association (hereafter referred to as "EFMA") were granted a 
hearing and made their views known in writing. 
(8) Representatives of the European Fertiliser Importers Association 
(hereafter referred to as "EFIA") whose members import urea from 
the countries concerned, were also granted a hearing and made 
their views known in writing. 
(9) The Commission sought and verified all the information it deemed 
to be necessary for the purpose of its investigation and visited 
the premises of the following companies: 
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(a) Community producers: 
- Hydro Agri GmbH, Brunsbuettel, Germany 
- Stickstoffwerke AG, Wittenberg-Piesteritz, Germany 
- Fertilizantes Enfersa, SA, Madrid, Spain 
- FESA Fertilizantes Espanoles, SA, Madrid, Spain 
- Grande Paroisse SA, Paris, France 
- Irish Fertilizer Industry Ltd, Dublin, Ireland 
- Enichem Agricoltura, SpA, Milan, Italy 
DSM Meststoffen BV, Sittard, Netherlands 
- Kemira BV, Rotterdam, Netherlands 
(b) Producer/exporter in the Czech Republic: 
- Chemopetrol s.p., Litvinov 
(c) Producers/exporters in the Slovak Republic: 
- Duslo s.p., Sala (producer/exporter) 
- Petrimex Foreign Trade Company Ltd, Bratislava (exporter 
and former Czechoslovakian export monopoly holder) 
(d) Importers in the Community: 
- Interore SA, Brussels, Belgium 
- Unifert SA, Brussels, Belgium 
- Champagne Fertilisants SA, Reims, France. 
5 -
(10) The Commission received and used information from four other 
Community producers which had replied to the relevant 
questionnaire. 
(11) with regard to producers in Belarus, Georgia, Russia, Tajikistan, 
Ukraine and Uzbekistan, information supplied indicated that there 
were a total of 24 plants in these countries known or thought to 
produce urea. - Questionnaires requesting information were sent to 
all these producers, however, reactions were only received from 
three of them. Of these three, two were producers situated in 
Russia and both stated that they did not export urea to the 
Community during the investigation period. The third producer, 
the only known fertiliser manufacturer in Georgia, said it had 
ceased urea production some years ago. 
(12) The investigation of dumping covered the period from 
1 January 1992 to 31 December 1992 (the "investigation period"). 
(13) All the parties concerned were informed of the essential facts 
and considerations on the basis of which it was intended to 
recommend the imposition of definitive measures. They were also 
granted a period within which to make representations subsequent 
to these disclosures. 
(14) Some of the parties concerned submitted that they had not been 
provided with sufficient detailed information by the Commission 
concerning the calculation of dumping margins and injury 
elimination levels and that this might affect their ability to 
defend their interests. 
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(15) As regards disclosure, exporters were informed of details of how 
their individual dumping margins were calculated and the injury 
elimination levels established. Community producers were 
supplied with details of average Community producers' sales 
prices, undercutting, profit levels, and any injury elimination 
level established; importers received disclosure of detailed 
information on all aspects of the investigation and of the 
reasons on the basis of which it was intended to recommend the 
imposition of definitive duties. 
Thus, in the Commission's view, each interested party received, 
within the constraints laid down in Article 8 of Regulation (EEC) 
N° 2423/88, all available information required for the party 
concerned to protect its interests and relevant for its defence. 
B. PRODUCT UNDER CONSIDERATION 
1. Product description 
(16) The product concerned is urea. It is produced from ammonia, 
which in turn is produced mainly from natural gas, although it 
can also be produced from the waste products of oil refining. 
When in solid form, it is either in small "granules" (which have 
a rough surface) or small "prills" (which are also granular but 
have a smooth surface). Solid urea can also be mixed with water 
to make "liquid" urea. 
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(17) Urea in granular and prilled forms can be used for both 
agricultural and industrial purposes: 
- agricultural grade urea can be used either as a fertiliser 
which is spread onto the soil or as an animal feed additive; 
- industrial (or "technical") grade urea is a raw material for 
certain glues and plastics. 
Liquid urea can be used both as a fertiliser and for industrial 
purposes. Although urea is presented in the different forms 
mentioned above, its chemical properties remain basically the 
same and may be regarded for the purposes of the present 
proceeding as one product. 
2. Like product 
(18) It was established that urea produced and sold by the Community 
industry on the Community market is a like product within the 
meaning of Article 2(12) of Regulation (EEC) N° 2423/88 as 
regards its physical and technical characteristics when compared 
to the urea produced by the countries concerned in this 
proceeding. 
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COMMUNITY INDUSTRY 
( 19 ) The investigation showed that the producers which cooperated in 
the investigation accounted for the entire production of urea in 
the Community and may therefore, in accordance with Article 4(5) 
of Regulation (EEC) N° 2423/88, be considered as the Community 
industry. 
D. DUMPING 
1. Czech Republic and Slovak Republic 
(a) General 
(20) Following the division of Czechoslovakia into the Czech Republic 
and the Slovak Republic at the beginning of 1993, each of these 
new countries now has one urea production company situated within 
its borders. 
(21) Since 1 March 1992, Czechoslovakia and, latterly, the Czech 
Republic and the Slovak Republic, have been considered as market 
economies. Accordingly, normal value was established using data 
relating to the domestic sales prices and production costs of 
each producer. It should be noted that during the investigation 
period, Czechoslovakia had not yet become two independent 
, countries, therefore any reference to Czech or Slovak "domestic" 
sales prices in this Regulation means sales prices in the former 
Czechoslovakia. 
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(22) Given that the two countries were coming through the transitional 
stage between centrally planned and free market economies at the 
time of the investigation, particular attention was paid to the 
question of whether the prices and costs of the producers were 
still influenced by the continuation of historical links between 
State owned companies. Such links may have resulted in prices 
and costs not being capable of being considered in the ordinary 
course of trade and may have necessitated an appropriate 
adjustment of normal value. In the present case, however, this 
was not considered necessary following analysis of the producers' 
accounting data. 
(23) Historically, the two production companies have always maintained 
their own accounting records and organised their own domestic 
sales of urea. With regard to export sales, even prior to the 
division of Czechoslovakia into two separate Republics, the two 
production companies always knew the final destination of their 
goods. It is therefore possible to determine domestic prices in 
Czechoslovakia and export prices for each producer separately. 
(b) Normal value 
(24) In accordance with Article 2(3)(a) of Regulation (EC) No 2423/88, 
normal value was established on the basis of the price actually 
paid in the ordinary course of trade for domestic sales of the 
like product, which were made in sufficient quantities to permit 
a proper comparison. To determine that such sales were 
profitable, the cost of production data provided were analysed. 
- 10 -
It was first necessary, however, to establish whether the data 
were both reliable and in accordance with acceptable accounting 
standards. Examination of the Czech and Slovak producers' records 
showed that costs had been kept on a cost centre basis and that, 
in particular, depreciation had been taken into account as well 
as financing costs. With regard to purchases of raw materials, it 
was found that the Slovak producer had purchased its gas from 
Russia at open market prices. The Czech producer did not use 
natural gas as a raw material but instead produced urea from the 
waste products of oil refining. 
(25) It was established that domestic prices were profitable. 
Consequently, normal value was calculated on the basis of each 
producer's weighted average net domestic sales price of 
agricultural and industrial prilled urea sold in the ordinary 
course of trade during 1992. 
(c) Export price 
(26) In the case of direct sales made by the Czech and Slovak 
producers to customers in the Community, export prices were 
established on the basis of the prices paid or payable, to the 
producer concerned. 
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(27) In addition to direct sales to the Community, the Czech and 
Slovak producers both made some export sales during the 
investigation period to customers in the Community via the former 
Czechoslovakian export monopoly holder, Petrimex Foreign Trade 
Company Ltd (hereafter called "Petrimex"). In such cases, the 
net price at which the production companies sold the urea to 
Petrimex has been considered as the export price within the 
meaning of Article 2.8(a) of Regulation N° 2423/88, taking into 
consideration the fact that the ultimate destination of the goods 
was known to the manufacturer at the time of their delivery and 
that normal value has been established at a corresponding level. 
(d) Comparison 
(28) In accordance with Article 2(10)(c) of Regulation N° 2423/88, 
adjustments were made, where appropriate, to both normal value 
and export price in order to take account of directly related 
selling expenses and enable them to be compared at the same 
level. These adjustments included transport and related costs, 
packing costs and commissions. 
(29) A comparison was then made between normal value (ex-works) and 
export price (ex-works) on a transaction-by-transaction basis. 
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(e) Dumping margins 
(30) The dumping margins, expressed as percentages of the CIF price, 
free at Community frontier, were as follows: 
- Czech Republic: Duslo s.p. 0.7% 
- Slovak Republic: Chemopetrol s.p. 11.8% 
2. Republics of Belarus, Georgia, Russia, Tajikistan, Ukraine 
and Uzbekistan 
(a) General 
(31) In view of the non-cooperation of the majority of the 
producers/exporters in Belarus, Georgia, Russia, Tajikistan, 
Ukraine and Uzbekistan', in accordance with Article 7(7) (b) of 
Regulation (EEC) N° 2423/88 the facts available have been used to 
examine the question of dumping. 
(32) To this end, consideration was given as to whether Eurostat data 
could be used for establishing export prices for these countries. 
A problem arose, however, in view of the fact that prior to 
January 1992 only one geo-nomenclature Eurostat code existed for 
the USSR (including the three Baltic States of Estonia, Latvia 
and Lithuania). From January 19 92 onwards, separate codes were 
created for these Baltic States, however the other Republics of 
the former USSR continued to be grouped together under one code. 
- 13 -
It was only in mid-1992 that separate statistical import codes 
for Belarus, Georgia, Russia, Tajikistan, Ukraine and Uzbekistan 
were established. Available Eurostat data for the second half of 
1992 show that no imports into the Community were made from 
Belarus, Georgia, Tajikistan and Uzbekistan (with the exception 
of a negligible quantity of 119 tonnes from Belarus). 
(33) During the course of the investigation, the Community producers 
and importers also indicated that most of the urea exported from 
the former USSR was of Russian origin. In addition, the Ministry 
of Foreign Affairs of Uzbekistan informed the Commission that no 
exports of urea had been made to the Community in 1992 by any of 
the Uzbek producers. With regard to Georgia, as mentioned 
previously in this Regulation, the only known producer of urea in 
that country stated that it ceased urea production some years 
ago. / 
(34) For these reasons and for the purposes of the current review 
proceeding, it has been concluded that none of the urea imports 
under the geo-nomenclature code "USSR" in Eurostat during the 
first part of 1992 should be attributed to Belarus, Georgia, 
Tajikistan or Uzbekistan. Accordingly, these four countries are 
to be excluded from the examination of dumping. 
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(35) With regard to establishing separate import volumes for Russia 
and Ukraine, the individual ratios found for these two countries 
in respect of their imports during the second part of 1992 were 
also applied to the "USSR" import volume during the first part of 
1992. For previous years, the same ratios of import volumes from 
Russia and Ukraine found in 1992 were also applied to establish 
separate import volumes. 
(b) Normal value (Russia and Ukraine) 
- choice of analogue country 
(36) In order to establish the normal value of urea produced in Russia 
and Ukraine, account was taken of the fact that these countries 
do not have market economies. In accordance, therefore, with 
Article 2(5) of Regulation (EEC) No 2423/88, a determination of 
normal value had to be based on the conditions in a market 
economy country (the "analogue" country). 
(37) With regard to the choice of an analogue country, Australia was 
suggested by EFMA. On the other hand, EFIA objected to the use 
of any analogue country and proposed that the actual costs in the 
countries concerned by the proceeding be used instead. 
(38) In view of the lack of alternatives, contact was made with the 
sole Australian producer of urea and this company agreed to 
cooperate with the investigation. At a later stage in the 
proceeding, EFIA submitted that Canada was a more suitable 
analogue country and provided data concerning urea production 
there. 
15 -
As the suggestion to use Canada as an analogue country had come 
late and, in order not to unduly delay the length of the 
investigation at that time, it was decided to proceed using 
Australia as the provisional analogue country. 
(39) The investigation revealed, however, that Australia was not the 
most appropriate choice of analogue country given its isolated 
position in relation to the world markets and also the fact that 
domestic sales prices were higher than those prevailing in 
Europe. 
(40) As the Slovak Republic had already been investigated and the data 
provided by the producer there verified, consideration was given 
to using this country as the analogue country. 
(41) The investigation had revealed that the Slovak producer's 
production process was based on natural gas, as are the Russian 
and Ukrainian manufacturers. Moreover, the Slovak producer 
bought its gas from Russia at open market prices. In view also 
of the fact that the Slovak sales prices reflected the real cost 
of production under market economy conditions and that there was 
a substantial domestic market, the Slovak Republic was considered 
to be an appropriate analogue country for establishing normal 
value for Russia and Ukraine. 
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(42) Certain parties concerned objected to this and argued that 
Slovakia was inappropriate due to its small production volume in 
comparison to that of the USSR. Moreover, because of its reliance 
on Russian gas, it was alleged that production costs were not 
comparable. The investigation showed, however, that although 
Russia has large production capacity, its exports to the 
Community are broadly similar to the level of production in 
Slovakia. Furthermore, the sole Slovak producer bought the basic 
raw material - gas - at open market prices from Russia. The 
requirement to establish normal value at market economy 
conditions was therefore duly respected. 
Following disclosure to all the interested parties of the 
essential facts and considerations upon which it was intended to 
propose measures, the Russian authorities, although admitting 
that there are similarities between their urea production process 
and that of the Slovak producer, suggested that Canada should be 
used as the analogue country in this particular case. This 
request came extremely late in the proceeding despite the 
invitation made in the Notice of Initiation for comments 
concerning the selection of the analogue country. Therefore, 
the Slovak Republic is still considered to be an appropriate 
analogue country for the reasons stated above. 
(c) Normal value (Russia and Ukraine) - calculation 
(43) As already established in recital 25 of this Regulation, when 
compared to the cost of production data, the weighted average net 
domestic sales price in 1992 of Slovak-produced agricultural and 
industrial prilled urea yielded a profit overall. Consequently, 
in accordance with Article 2(5)(a)(i) of Regulation (EEC) 
No.2423/88, normal value for Russia and Ukraine has been based 
on the ex-works sales prices of the Slovak producer on the 
Czechoslovakian market during the investigation period. 
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(d) Export price 
(44) With regard to establishing the export price, the Ministry of 
Foreign Economic Relations of the Russian Federation submitted 
that the calculations should be made separately for each of the 
two Combined Nomenclature (CN) Codes under which Russian urea is 
imported. Furthermore, EFIA submitted that the comparison 
between prices of Russian and Community urea should be made 
separately for agricultural and industrial grades. 
(45) In this context, all urea has been considered one product (see 
recital 17 above) and it should be noted that no information 
concerning Russian or Ukrainian exports has been provided by the 
producers/exporters in these countries. Moreover, the importers 
of urea which cooperated with the investigation and which 
purchased the product directly from the countries concerned only 
accounted for approximately 1.5% of the total imports of urea 
from Russia and Ukraine during the investigation period. 
In view of this and in accordance with Article 7(7) (b) of 
Regulation (EEC) No. 2423/88, the facts available were used to 
calculate export prices. Eurostat data, which comprise all forms 
and grades of urea, has been used in the determination of export 
prices being considered the most reasonable facts available. 
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(46) It was considered that the most reasonable basis for establishing 
export prices was to take the CIF Eurostat import values for the 
Combined Nomenclature codes in question and adjust them to 
Russian and Ukrainian frontier prices. Certain interested parties 
contested this approach and submitted that a more accurate method 
would be to calculate the ex-works price in Russia and Ukraine. 
This argument cannot be accepted as, in non-market economies, the 
siting of industrial production facilities (such as those for 
urea) need not be determined by free-market considerations such 
as access to transport facilities, proximity to raw material 
sources or user markets, etc. Furthermore, costs, including 
transport costs, in such economies are not governed by market 
forces. Accordingly, the view has been taken that export prices 
should be calculated at ex-frontier level in this particular 
case. 
(e) Comparison 
(47) Normal value in the Slovak Republic was compared with the export 
price as established in recital 46 for Russia and Ukraine. For 
the purpose of ensuring a fair comparison, the Commission first 
examined the question of whether there were physical or technical 
differences between the Slovak product and urea manufactured in 
Russia and the Ukraine. No differences were found, therefore no 
adjustments to the normal value or export prices on these grounds 
were necessary. 
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(48) The Commission was requested to address the question of whether 
an adjustment to the normal value was necessary in order to take 
account of the difference in the price paid for Russian gas by 
the urea producer in the Slovak Republic and the price paid for 
Russian gas by urea producers in Russia and Ukraine. To this 
end, it was found that the Slovak producer had paid the free 
market price to Russia for its gas while producers in Russia and 
Ukraine, it is believed, paid considerably less. 
(49) Nevertheless, for the purposes of making a correct comparison 
between normal value in the Slovak Republic and export prices in 
Russia and Ukraine, any difference is irrelevant as these two 
countries were not considered as market economies during the 
investigation period and therefore their raw material costs were 
not governed by market forces. Thus, no adjustments were made to 
the normal value for reasons of differences in raw material 
costs. 
(50) The question of whether an adjustment to the normal value was 
necessary to take account of the costs of sending gas by pipeline 
from Russia to the Slovak Republic was also considered. The view 
has been taken that no adjustment is necessary as the majority 
of Russian and Ukrainian urea producers are situated considerable 
distances away from the gas fields. It follows that, if the 
costs in these countries had been governed by market forces, 
Russian and Ukrainian urea producers would also, like the Slovak 
producer, have incurred costs for piping gas to the production 
sites. 
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(51) Normal value and export prices were, however, adjusted to take 
account of certain of the selling expenses listed in Article 
2(10)(c) of Regulation (EEC) N° 2423/88. Such adjustments were 
made, where appropriate, for transport and insurance costs. 
(52) In particular, the CIF Eurostat import values were adjusted to 
Russian and Ukrainian frontier prices. This was achieved by 
deducting a certain amount for freight and insurance costs which 
were derived from the data supplied by the cooperating 
importers. 
(53) A comparison was then made, at the same level of trade, between 
normal value (ex-works) in the Slovak Republic and export prices 
(ex-frontier) for Russia and Ukraine respectively. 
(f) Dumping margins 
(54) The dumping margins, expressed as percentages of the CIF price, 
free at Community frontier, were as follows: 
- Russia 28.2% 
- Ukraine 20.4% 
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E. INJURY 
1. Preliminary considerations 
(55) The Commission has established that during the investigation 
period the only producer in the Czech Republic was dumping at a 
rate of 0.7%. It was considered that this dumping margin is de-
minimis for the purpose of the present proceeding. It follows, 
therefore, that it was not necessary to examine the question of 
whether imports originating in the Czech Republic have caused 
injury to the Community industry. 
(56) With regard to the Republics of Belarus, Georgia, Tajikistan and 
the Uzbekistan, it should be remembered that these four countries 
were excluded from the examination of dumping on the grounds of 
no exports or negligible exports to the Community. It follows 
that these four countries are also to be excluded from the 
examination of injury in the present proceeding. 
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2. Volume and market shares of dumped imports 
(a) Community consumption 
(57) In calculating the total consumption of all types of urea in the 
Community (agricultural, industrial, prilled, granules, in liquid 
form, etc.), the Commission added the total EC urea sales of the 
Community producers to the total imports into the Community of 
all types of urea from all sources. On this basis, Community 
consumption of urea declined by 2.7% between 1989 and the 
investigation period. 
(b) Former Czechoslovakia 
(58) On the basis of information contained in Eurostat, the Commission 
found that declared imports of Czechoslovakian origin apparently 
stood at 134,930 tonnes during the investigation period. 
However, the Commission's investigation at the premises of the 
Czech and Slovak producer showed that they had only exported a 
combined total of 84,504 tonnes to the Community. Information 
received from two separate sources indicated that the difference 
of 50,426 tonnes comprised urea of Ukrainian origin which was 
transhipped through Czechoslovakia by newly formed trading houses 
and incorrectly attributed with Czechoslovakian origin on 
importation into the Community. A similar situation occurred in 
1991 when the quantities involved were approximately 14,000 
tonnes. 
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(59) Accordingly, for the purposes of calculating the volume of dumped 
imports and market shares, the Commission has treated the 
difference in quantities referred to above as being urea 
originating in Ukraine and has attributed the said quantities to 
import data relating to Ukraine. The Ukrainian authorities were 
advised of these findings and raised no objections. All data 
concerning exports made by the Czech or Slovak producers 
therefore reflects their actual level of exports to the 
Community. 
(c) The Slovak Republic 
(60) It has been established that dumped imports of Slovakian origin 
increased by 77% between 1989 and the investigation period. The 
market share, however, of such imports rose from 0.3% in 1989 to 
0.5% during the investigation period. Given this negligible 
market share, it is considered that there are insufficient 
grounds to cumulate imports originating in the Slovak Republic. 
It follows that the question of whether imports from the Slovak 
Republic have caused injury need not be addressed. 
(d) Ukraine 
(61) The investigation has shown that dumped imports of Ukrainian 
origin rose between 1989 and the investigation period with a 
resultant increase in market share from 0,2% to 1,7%. Given this 
very low share of sales within the Community, it is also 
considered that there are insufficient grounds to cumulate 
Ukrainian urea imports. As with the Slovak Republic, it follows 
that there is no need to examine the question of whether such 
imports have caused injury to the Community industry concerned. 
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(e) Russia 
(62) The investigation revealed that dumped imports of Russian origin 
went up from 39,873 tonnes in 1989 to 117,706 tonnes during the 
investigation period, an increase of 195%. Although this 
quantity significantly exceeded the amount agreed in the 
undertaking given in 1987, it should be borne in mind that 
following the political break-up of the USSR, the export monopoly 
holder lost its monopoly and, in effect, the undertaking became 
totally unmanageable. Certain producers in Russia began 
exporting direct to the Community without the intervention of the 
export monopolist and this lack of a restraining presence led to 
the large influx of imports which occurred during the 
investigation period. It was found that the market share of 
dumped imports from Russia rose from 0.9% in 1989 to 2.6% during 
the investigation period. 
3. Prices of dumped imports 
(63) For imports of urea from Russia, the weighted average duty paid 
CIF Community frontier price was compared to the weighted average 
ex-works selling price of urea in the Community of the Community 
producers. All prices were compared at the same level of trade 
and all discounts and rebates were excluded. With regard to the 
duty paid price, this was calculated by taking the Eurostat 
import price and adding customs duty at a rate of 10,6% (a 
weighed average - based on volume - of the two customs duty rates 
of 11% and 8% applicable to imports of urea under the different 
CN codes). 
- 25 -
(64) In making such a comparison, however, it was brought to the 
attention of the Commission that a certain difference in price 
existed between Community-produced urea and that from the former 
USSR as a result of the imported product's inferior quality and 
finish. Its tendency to deteriorate during transport, combined 
with the fact that importers cannot always offer the same 
security of supply as the Community producers, leads naturally to 
lower prices. While these differences are difficult to evaluate 
in monetary terms, it has been concluded that such a difference 
exists and that a 10% adjustment in value is considered to be 
appropriate. 
(65) Whilst admitting that the Community producers' product commanded 
a higher price, EFMA considered that the level of the adjustment 
was too high. Moreover, they argued that the conclusions drawn 
were without basis given the lack of factual supporting evidence. 
EFIA also contested the level of the adjustment, but on the 
grounds that it was insufficient given the significantly inferior 
state of the Russian product on arrival at the end user in the 
Community. They argued that this poorer quality had to be 
compensated for by lower prices. 
(66) In view of the inconclusive and conflicting information received 
by the Commission, it was concluded, based on the information 
available, that a 10% adjustment level was both reasonable and 
appropriate. It also found the middle ground between the figure 
put forward by the Community producers and the amount requested 
by EFIA. 
26 -
(67) Allowing for these differences, the level of undercutting of the 
Community producers' prices was found to be approximately 10% for 
urea of Russian origin. 
4. Situation of the Community industry 
(a) Production, production capacity, capacity utilisation 
rate and stock 
(68) It was found that the Community producers' production of urea 
increased by 1.4% between 1989 and the investigation period. It 
should be noted that although one of the Community producers 
(Stickstoffwerke A.G.) was situated in the former German 
Democratic Republic, the output and sales of this company have 
been included in the Community producers' figures from 1989 
onwards. 
(69) With regard to the Community producers' production capacity, it 
was established that this declined by 1.6% between 1989 and the 
investigation period. In view of these minor fluctuations in 
production and capacity, capacity utilisation rose slightly from 
75% in 1989 to 77% during the investigation period. 
(70) The investigation also showed that the Community producers' 
stocks of urea increased by 8.7% between 1989 and the 
investigation period. 
- 27 -
(b) Sales and market shares 
(71) Sales on the Community market by the industry concerned decreased 
by 1.7% between 1989 and the investigation period. The Community 
producers' market share, on the other hand, rose from 77.5% in 
1989 to 78.5% during the investigation period. Such an increase, 
however, coincided with a decrease in the level of imports from 
third countries not concerned by this present proceeding. 
(c) Sales prices, profitability and profit shortfall 
(72) The Community producers' average sales prices dropped by 10% 
between 1989 and the investigation period. With regard to 
profitability, the investigation showed that the Community 
industry's position had worsened between 1989 and the 
investigation period as, on a weighted average basis, losses had 
increased from 3.7% to 6%. 
(73) The majority of Community producers claimed that a minimum pre­
tax profit of 10-15% was required for them to remain competitive. 
However, this was not substantiated and, as urea is a long 
established product, this figure is considered to be high. The 
Commission is of the opinion that after taking account of the 
decline in demand for urea, the need to finance additional 
investments in manufacturing facilities and the profit which is 
considered reasonable in the original anti-dumping investigation 
concerning this product, a pre-tax profit rate of 5% should be 
used as the basis for assessing profit shortfall in this present 
proceeding. 
- 28 -
(d) Employment 
(74) The investigation showed that the number of people employed by 
the Community producers in the urea sector fell by 8% between 
19 89 and the investigation period. 
5. Conclusions concerning injury 
(75) It is noted that between 1989 and the investigation period anti­
dumping measures in the form of quantitative undertakings were in 
force. Nevertheless, despite these measures, the situation of the 
Community producers has worsened. Although, many of the main 
economic indicators of injury have remained fairly static, the 
fall in prices combined with increased stock levels and loss of 
employment are particularly significant. It is also evident that 
the Community demand for urea has contracted slightly since 19 89 
and that to maintain production levels and market share the 
Community producers have been obliged to lower their prices to 
levels which cause even, greater losses than those which occurred 
in 1989. 
(76) In view of the above factors, it is concluded that the Community 
industry has suffered material injury within the meaning of 
Article 4(1) of Regulation (EEC) N" 2423/88. 
29 -
F. CAUSE OF INJURY 
1. Effect of dumped imports 
(77) In the examination of the extent to which the material injury 
suffered by the Community industry was caused by dumped imports, 
it was found, as explained in recital 62 above, that the Russian 
market share rose from 0.9% in 1989 to 2.6% during the 
investigation period. 
(78) With regard to sales, the investigation showed that the Community 
producers' sales decreased by 63,700 tonnes between 1989 and the 
investigation period while the volume of imports from Russia rose 
by 77,833 tonnes. As stated below, it was also found that there 
had been a decline in imports of 263,802 tonnes from other third 
countries (excluding the Czech Republic, the Slovak Republic and 
Ukraine). Accordingly, it is considered that all the sales in 
the Community lost by the Community producers can be attributed 
to dumped imports from Russia. 
(79) As far as prices and profitability are concerned, it was 
established that during the investigation period, the average 
selling price per tonne of the Community producers had declined 
by 10% compared with 1989. It is clear that the increasing 
presence of imports from Russia played a considerable part in 
this fall in prices since they were being offered on the market 
at duty paid prices of up to 14% below the Community producers ' 
production costs. 
- 30 -
2. Effect of other factors 
(80) The question of whether the injury suffered by the Community 
industry had been caused by factors other than dumping by Russian 
exporters has also been examined. There is, however, no evidence 
of increased imports from any third country not subject to anti­
dumping measures. In 1989 global imports from other third 
countries accounted for 92.7% of all imports into the EC of urea, 
whereas in the investigation period this figure had dropped to 
71.4%. The estimated EC market share of such imports decreased 
from 20.8% to 15.6% over the same period. 
(81) As far as the prices of such imports are concerned, it was found 
that the weighted average CIF import price (before duty) from 
these other third countries was 22.5% higher than the comparable 
CIF import price of Russian urea. At a duty paid level, their 
price to the importer would be just below the loss-making 
weighted average selling price of the Community producers during 
the investigation period. It can be argued that the prices of 
these imports also contributed to the depressed state of the EC 
industry as such prices were well below the theoretical level 
needed to enable Community producers to cover all costs and 
achieve a reasonable profit. 
- 31 -
(82) It is considered that even though there was a fall in prices, 
the minor reduction in the overall demand for urea in the 
Community between 1989 and the investigation period indicates 
that the level of consumption for this product has more or less 
reached its peak. In addition, the Community producers have 
slightly increased their market share which would indicate that 
the shrinking market has not been a major contributory factor to 
the poor situation of the EC producers. 
(83) Whilst it can be argued that imports from other third countries 
may have contributed to the losses suffered by the Community 
industry, this does not detract from the fact that imports from 
Russia, taken in isolation, by virtue of their low prices and 
increasing market penetration, have caused material injury to the 
Community industry. 
G. LIKELIHOOD OF FURTHER INJURY IN THE EVENT OF 
EXPIRY OF EXISTING ANTI-DUMPING MEASURES 
1. Czech and Slovak Republics 
(a) Preliminary considerations 
(84) As the normal five year duration period for the measures being 
reviewed would normally have lapsed in February 1994, the 
question of likelihood of recurrence of injury was examined. To 
this end, the following factors were considered: 
- 32 -
- production and capacity levels in the exporting countries; 
- the rate of increase of dumped imports to the EC; 
- the likelihood of Czech or Slovak urea entering the Community 
at price levels which will have a depressing effect on the 
Community producers' prices; 
- the actual and potential negative effects of such imports on 
the development and production of the Community industry. 
(85) With regard to the Czech and Slovak producers' capacity 
utilisation, the investigation established that there is either 
limited scope for increasing production levels or there is no 
stated intention to do so. UnlessNthere were to be a dramatic 
change in the pattern of their domestic and export sales, it is 
considered unlikely that imports into the Community from the 
Czech Republic and Slovak Republic will increase much beyond 
current levels. 
(86) With regard to the rate of increase of imports from these two 
countries, it has been established that most, if not all, of the 
apparent rise in volume stems from the reunification of Germany 
and the inclusion of sales to traditional customers in the former 
German Democratic Republic (GDR) in the Eurostat import 
statistics. If these sales to the former GDR were to be 
excluded,. the quantitative limits originally agreed in the 
undertaking would have been respected. 
33 -
(87) Given that the Czechs and Slovaks are coming through the 
transitional stage between centrally planned and free market 
economies, it is considered inevitable that the export prices of 
urea must rise in line with market determined production and 
transport costs. In the medium term, it is thought that the 
current price advantage of the Czech and Slovak producers will be 
diminished and that they will be obliged to sell at higher prices 
which are more comparable to those of the Community producers. 
(88) The investigation has shown that the impact of Czech and Slovak 
imports has been negligible on the Community market and that, 
given the production and trading patterns of the producers in 
these two countries, it is unlikely that their exports to the 
Community will rise to significant levels in the future. As a 
result, it is considered that imports from the Czech Republic and 
the Slovak Republic will not have any major effect on the 
development and production of the Community industry. 
(b) Conclusion 
(89) In view of the above factors and the minimal actual and potential 
market penetration of the Czech and Slovak Republics, it is 
concluded that there is little likelihood of injury being caused 
by dumped imports from these two countries in the near future and 
that there is no necessity to renew the protective measures. 
- 34 -
2. Russia and the Ukraine 
(a) Preliminary consideration 
(90) As with the Czech and Slovak Republics, it is necessary to make a 
reasoned forecast of what would happen in the future if there 
were to be no anti-dumping measures in force against Russia and 
Ukraine. 
(b) Russia 
(91) With regard to Russia, information available indicates that 
producers there have the capacity to produce 6,4 million tonnes 
of' urea per annum. The data provided also shows that Russia 
actually produced 4,5 million tonnes of urea in 1992. In view of 
the breakdown of the collective farming system in this country, 
it is highly probable that the domestic demand for urea will 
plummet as the newly privatised farms will have no money to pay 
for fertilisers. The urea producers will therefore be obliged to 
explore further the possibility of increasing their trade with 
the Community. 
(92) Given also that the introduction of "set-aside" under the Common 
Agricultural Policy has caused many Community farmers to 
economise with regard to fertiliser purchases, it is highly 
likely that the market will contract further and Russian 
exporters will increase export volumes and reduce their dumped 
prices even more to gain market share. 
- 35 -
(c) Conclusion regarding Russia 
(93) It is concluded on the basis of the foregoing that the negative 
effects of dumped imports from Russia would continue in the 
absence of measures. 
(d) Ukraine 
(94) With regard to Ukraine, information supplied indicates the 
producers there have the capacity to produce 3.1 million tonnes 
of urea per annum. Unlike Russia, however, Ukraine is not self 
sufficient in natural gas (the raw material used by Ukrainian 
urea producers) and relies heavily upon imports of gas from 
Russia. Information available shows that the gas supply has been 
severely disrupted and that Ukraine may no longer be capable of 
utilising its existing capacity. 
(95) As to the level of imports from Ukraine, the latest data 
available shows that these have dropped to negligible levels 
(6102 tonnes during the period January - October 1993). 
(e) Conclusion concerning Ukraine 
(96) Given the above, it is considered unlikely that import levels 
from Ukraine will be in sufficient quantities in the future to 
cause injury to the Community industry concerned. Accordingly, it 
is concluded that there is no need to renew the protective 
measures against Ukraine. 
- 36 
H. COMMUNITY INTEREST 
(97) In examining whether the interest of the Community is best served 
by the maintenance of anti-dumping measures, it should be 
recalled that the purpose of such measures - preventing 
distortion of competition arising from unfair commercial 
practices in the Community market - is fundamentally in the 
general Community interest. 
(98) With regard to this proceeding, it is considered that without 
measures to correct the effects of dumped imports, one or more of 
the Community producers may be forced to close its urea 
production facilities. This would lead to a loss of employment 
in the Community and would reduce the amount of competition on 
the market. 
(99) It is true that farmers and industrial users of urea in the 
Community have benefitted in the short term from the low price of 
dumped imports, however, it must also be borne in mind that urea 
purchases by such customers account for a relatively small 
percentage of their total inputs. Given also that the price of 
urea has dropped in recent years, any adjustment to the dumping 
measures is unlikely to have a major impact on users' budgets 
and, on balance, is not sufficient reason to deny legitimate 
protection to the Community producers. 
- 37 
TERMINATION 
(a) Termination as regards the Czech Republic and 
the Slovak Republic 
(100) As explained previously in this Regulation, but for the inclusion 
of sales to the former GDR in Eurostat import statistics, the 
Czech and Slovak Republics have in essence respected the terms of 
the undertaking and the quantitative limits laid down therein. 
Given also the limited scope for increasing exports to the 
Community much above current levels, the very low dumping margin 
of the Czech products, the minimal market share and penetration 
of Czech and Slovak imports and the limited effect on prices of 
such imports, it is considered that the measures against these 
two countries should be terminated. ' 
No objection to this course of action was raised in the Advisory 
Committee. 
- 38 -
(b) Termination as regards Belarus, Georgia, Tajikistan 
and Uzbekistan 
(101) The conclusion was drawn in recital 34 of this Regulation that 
there is no evidence of significant imports into the Community 
from the above-mentioned countries during the investigation 
period. Whilst it is acknowledged that substantial production 
capacity exists in these countries, there is no evidence of any 
imminent or foreseeable change in circumstances which could lead 
to an influx of low-priced imports into the Community from the 
countries in question. In view of the above, the anti-dumping 
proceeding with regard to Belarus, Georgia, Tajikistan and 
Uzbekistan should be terminated. 
No objection to this course of action was raised in the Advisory 
Committee. 
(c) Termination as regards Ukraine 
(102) As with the countries mentioned in the previous recital, it is 
acknowledged that a considerable capacity for urea production 
exists in Ukraine. Nevertheless, given the relatively low level 
of market share held by Ukrainian exports and given the 
uncertainties of the gas supply from Russia, there is no clear 
evidence of any imminent change in circumstances. Accordingly, it 
is concluded that there is no need to renew the anti-dumping 
measures against Ukraine. 
39 -
No objection to this course, of action was raised in the Advisory 
Committee. 
J. DEFINITIVE MEASURES 
(103) The investigation has clearly shown in the case of Russia that: 
- the quantities stipulated in the undertaking have not been 
respected, although, for the reasons stated elsewhere in this 
Regulation, this is not held to be the fault of the party which 
originally gave the undertaking; 
- in spite of the anti-dumping measures introduced in 1987, 
imports from Russia have continued to be dumped and have 
contributed to the material injury suffered by the Community 
industry; 
- Russia has a large excess production capacity and there is 
potential for increasing its dumped exports to the Community. 
(104) Given the above, anti-dumping measures should be imposed against 
Russia. 
- 40 -
(105) It has been established in recitals 72 and 73 of this Regulation 
that the Community producers suffered a loss during the 
investigation period and that a pre-tax profit rate of 5% was 
considered reasonable for the purposes of this proceeding. 
Accordingly, in order to establish a level of duty adequate to 
remove the injury caused by dumping, a price was calculated which 
would allow the Community industry to cover its cost of 
production and to achieve this reasonable profit of 5%. This 
price was then compared to the Russian CIF duty paid import price 
(adjusted to take account of the differences in quality). 
Expressed as a percentage of the CIF import price, free-at-
Community frontier, the injury elimination figure is 26,8%. 
(106) This injury elimination percentage is less than the dumping 
margin of 28.2% established for Russia. Consequently, in 
conformity with Article 13(3) of Regulation (EEC) N— 2423/88, the 
definitive anti-dumping duty should be established at the level 
of the injury elimination figure. 
(107) In view of the downward trend of Russian import prices, a 
variable duty is considered to be the most appropriate course of 
action in this particular case. This form of duty also allows the 
exporters to obtain a more adequate return for their exports. The 
variable duty to be imposed should be based on any difference 
between the actual CIF import price, free-at-Community frontier 
and a minimum price of 115 ECU per tonne, 
HAS ADOPTED THIS REGULATION: 
41 -
Article 1 
1. A definitive anti-dumping duty is hereby imposed on imports of 
urea falling within CN codes 3102 10 10 and 3102 10 90 
originating in the Russian Federation. 
2. The amount of the duty shall be the difference between 115 ECU 
per tonne and the net, free-at-Community frontier price, before 
customs clearance, if this price is lower. 
3. Unless otherwise specified, the provisions in force concerning 
customs duties shall apply. 
Article 2 
The undertakings offered by Petrimex Foreign Trade Company Ltd. 
(Bratislava) and Sojuzpromexport (Moscow) and accepted by Article 
2(1) of Regulation (EEC) No. 3339/87, are hereby terminated. 
Article 3 
This Regulation shall enter into force on the day following its 
publication in the official Journal of the European Community. 
This Regulation shall be binding in its entirety and directly 
applicable in all Member states. 
Done at Brussels, For the Council 
ISSN 0254-1475 
COM (94) 517 final 
DOCUMENTS 
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ISBN 92-77-82410-7 
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