WRITTEN QUESTION E-0279/01

by Agnes Schierhuber (PPE-DE) to the Commission

(9 February 2001)

Subject: Imposition of anti-dumping duties on the import of fertilisers

During the year 2000 anti-dumping duties were imposed on imports of fertilisers (such as potassium chloride, ammonium nitrate, urea, etc.) from Eastern European countries, including some which are candidates for EU membership.

1. The amendments to the Europe Agreements with the Central and Eastern European countries, which have largely already entered into force, will lead to a further liberalisation of trade in agricultural products. These agreements include a list of products which may be imported into the EU at zero duty.

In setting anti-dumping duties on fertilisers, which are an important item for farmers, is the Commission taking into account falling farm incomes in the EU (down 4 % in 1999)?

2. Does the Commission consider that the introduction of anti-dumping duties on fertilisers from the candidate countries is in accordance with the general trend towards liberalisation, and in particular the WTO agreements? Is the reduction of duties for agricultural products compatible with the introduction of new duties on non-agricultural products?

3. How should the introduction of new duties on industrial products from candidate countries be seen in the context of the pre-accession strategy for prospective eastward enlargement?

What is the Commission's view of the reduction of some 4,5 million tonnes in European nitrogenous fertiliser production (over 20 % of European production) from the end of 1999 to the beginning of 2000?

4. Why does the Commission calculate its anti-dumping duties, e.g. on ammonium nitrate from Poland and Ukraine, on the basis of a profit margin of 8 %, even though judgments of the European Court of Justice (e.g. Cases T-121/95 and C-46/98) have held a profit margin of 5 % to be adequate? What profit margins does the Commission suppose are achieved by the agriculture sector which is affected by such measures?

5. Since autumn 1999, prices for nitrogenous fertilisers in the EU have almost doubled (as at autumn 2000). Does the Commission consider that the anti-dumping duties encourage these price trends for nitrogenous fertilisers?

Answer given by Mr Lamy on behalf of the Commission

(17 April 2001)

1. The Europe Agreements with the associated countries fully uphold the right of the parties concerned to apply anti-dumping measures, where warranted because of certain unfair trade practices. For instance, Article 29 of the Europe Agreement with Poland provides that: If one of the Parties finds that dumping is taking place in trade with the other Party within the meaning of Article VI of the General Agreement on Tariffs and Trade, it may take appropriate measures against this practice in accordance with the Agreement relating to the application of Article VI of the General Agreement on Tariffs and Trade, with related internal legislation and with the conditions and procedures laid down in Article 33.

As to the potential impact of the measures on the farming sector in the Community, duties are only proposed if it is in the interest of the Community as a whole, taking account of the interests of all the parties concerned by the proceeding, i.e. producers, importers and users of the product under consideration. In the cases in question, all parties concerned had the opportunity to submit their views. In particular, farmers' organisations have systematically been invited to contribute to the investigations. Moreover, parties who so requested were granted an opportunity to be heard by the Commission. However, in the cases under consideration, it was concluded that the limited impact on farmers did not constitute a compelling reason against the imposition of anti-dumping measures.

2. It must be stressed that the reduction in customs tariffs on agricultural goods is in no way linked to measures aimed at combating injurious dumping. The objective of anti-dumping measures is to eliminate the effects of injurious dumping, which are established despite the existence of any customs tariffs.

3. As already pointed out, anti-dumping measures are not in contradiction with the Community's pre-accession strategy, as confirmed by the Council in its Essen Declaration of 1994. As to the presumed reduction in Community nitrogenous fertiliser production, the Commission found

that in some of the cases considered, a decline in production occurred in some years. It was nevertheless established that the dumping found had caused material injury to the Community industry. In the absence of injurious dumping, the decline in prices and profitability of the Community industry would have been much less marked.

4. The Commission does not agree with the Honourable Member's interpretation of the Court judgments. In Case T-210/95, the Court of First Instance states that: It follows that the profit margin to be used by the Council when calculating the target price that will remove the injury in question must be limited to the profit margin which the Community industry could reasonably count on under normal conditions of competition, in the absence of the dumped imports. This approach was applied by the Commission in each case and in the case of ammonium nitrate from Lithuania, Poland and Ukraine, this led to the determination of a margin of 8 % for the Community industry. For this exercise, the Commission is not required to assess profit margins of other interested parties such as farmers.

5. During the investigation periods chosen for the cases mentioned by the Honourable Member, prices of nitrogen fertilisers were abnormally low due to dumping by third countries, leading to considerable losses by the Community industry. Fertilisers are commodities that follow trends in the world market for raw materials such as gas. They are therefore characterised by considerable price volatility. This accounts for the bulk of recent price increases. At the same time the aim of anti-dumping duties is to eliminate the effects of injurious dumping on the Community market. Anti-dumping measures may have therefore also contributed to the recent increase in prices for nitrogen fertilisers.