Proposal for a COUNCIL REGULATION (EC) amending Regulation (EEC) No 3068/92 in respect of definitive anti-dumping duties on imports of potassium chloride originating in Belarus, Russia and Ukraine
Date: 1994-02-17
Institutions: European Commission
Subjects: CIS countries, anti-dumping duty, chemical salt, fertiliser, import, potash

COMVIISSION  OF  THE  EUROPEAN  COMMUNITIES 

C0M(94) 45 final 

Brussels,  17.02.1994 

Proposal  for a 

COUNCIL REGULATION  (EC) 

amending Regulation  (BEC) No 3068/92 in respect of definitive 

anti-dumping duties on imports of potassium chloride 

originating  in Belarus, Russia and Ukraine 

(presented  by the Commission) 

COUNCIL  REGULATION  (EC)  No 

Of 

amending  Regulation  (EEC) No  3068/92  in respect  of  definitive 

anti-dumping  duties on  imports  of potassium  chloride 

originating  in Belarus, Russia  and  Ukraine 

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  subsidized  imports  from  countries  not 

members  of  the  European  Community  (hereafter  referred  to  as  the  basic 

Regulation)  ^',  and  in particular  Article  14  thereof, 

Having  regard  to  the  proposal  submitted  by  the  Commission  after 

consultation  within  the Advisory  Committee  as provided  for under  the 

above-mentioned  Regulation, 

Whereas : 

I. 

PREVIOUS  PROCEDURE 

(1) 

By  Regulation  (EEC) No  3068(92) <2>, the  Council  imposed  a 

definitive  anti-dumping  duty on  imports  of potassium  chloride 

originating  in Belarus, Russia  and Ukraine,  falling  within  CN  Codes 

3104  20  10, 3104  20  50  and  3104  2090  and  consisting  of  the 

difference  between  a  set  minimum  price  and  the  net  price  free-at-

Community-frontier  of  the product  concerned. 

(1) OJ  No  L  209, 2.8.1988,  p.l. 
(2) OJ No  L  308, 24.10.1992, p.41 

II. 

REVIEW 

(2) 

By  a notice  published  on 26  June  1993^3^,  the  Commission,  after 

consultation  with  the Advisory  Committee  and  in accordance  with 

Article  14  of  the Basic  Regulation,  initiated  a review  of 

Regulation  (EEC) No  3068/92  (hereafter  the Regulation  subject  to 

review).  Information  made  available  to the  Commission  indicated 

that,  since  the  imposition  of  definitive  measures  in this  case, 

important  developments  have  taken place  in Belarus, the  Russian 

Federation  and  Ukraine,  following  decentralisation  from  the  former 

Soviet  Union.  These  developments  had  apparently  led,  inter  alia, 

to  the  introduction  of  autonomous  marketing  arrangements  for 

potash,  and  the  establishment  of new  export  channels. 

At  the  same  time,  the  Commission  had  in  its possession,  conflicting 

data  on  the  appropriateness  of  anti-dumping measures  in the  form  of 

a  variable  duty. 

(3) 

The  Commission  officially  advised  the producers, exporters  and 

importers  known  to be  concerned,  the  representatives  of  the 

exporting  countries, and  the  complainants, and gave  the  parties 

directly  concerned  the opportunity  to make  their views  known  in 

writing  and  to  request  a hearing.  The  representatives  of  the 

exporting  countries,  the  Community  industry  and  two  importers  in 

the  Community  made  their views  known.  All  parties  who  so  requested 

were  granted  a  hearing. 

The  representative  of Ukraine  submitted  that  there  was  no 

production  of  potash  in Ukraine  and  that  the  anti-dumping  duty 

imposed  should  be  repealed  in respect  of  imports  of  potash 

originating  in Ukraine.  However, 

..  ,. .  . 

based  on  the  customs  declarations  at  the  Community  frontier,  showed 

that,  in  the  period  of  investigation,  a  substantial  quantity  of 

potash  originating  in Ukraine  was  imported  in the  Community.  In 

(3) OJ  No  C  175, 26.6.1993, p.  10 

these  circumstances  and  in order  to  avoid  any  potential 

discrimination  or  circumvention,  imports  of  potash  originating  in 

Ukraine  should  not  be  excluded  from  the  scope  of  the  present  view. 

(4) 

The  Commission  sent  questionnaires  to parties  known  to be  concerned 

and  received  detailed  information  only  from  the  Community  industry 

and  a number  of  importers  in the  Community.  It  should  be  noted 

that  none  of  the producers  or  exporters  in the  countries  concerned 

cooperated  in the  Commission's  investigation  and  that  a  related 

importer,  Ferchimex,  and  an exporter  and  several  producers  in 

Russia  and  Belarus,  informed  the  Commission  that  they  would  not 

participate  in the  Commission's  investigation. 

(5) 

The  Commission  sought  and verified  all  information  it  considered 

necessary  for  the determination  of  dumping  and  injury.  It 

inspected  the  information  submitted  in the premises  of  the 

following  companies: 

i. Community  producers 

- Société  Commerciale  des  Potasses  et de  l'Azote  (SCPA) , France 

- Mines  des  Potasses  d'Alsace  (MDPA),  France 

- Kali  und  S a l z4),  Germany 

- Mitteldeutsche  Kali4),  Germany 

-  Comercial de  Potasas  (Coposa),  Spain 

-  Potasas  del  Llobregat,  Spain 

- Suria K,  Spain 

-  Potasas  de  Subiza,  Spain 

- Cleveland  Potash  Limited,  United  Kingdom 

ii.  Importers  and  traders 

Unrelated  importers 

FES A,  Spain 

Related  importers 

4)  The  Commission notes  that  these  companies  merged  after  the 

investigation period  and  now  trade  as  Kali  und  Salz GmbH,  Germany, 

Soquimes, Spain 

Traders 

Potash Limited, United Kingdom 

Potash Continental, United Kingdom 

Ameropa, France 

(6)  Upon request, parties were informed in writing of the essential 

facts and considerations on the basis of which it was intended to 

recommend  the imposition of definitive duties and the definitive 

collection of amounts secured by way of provisional duty.  They 

were also granted a reasonable period within which to make 

representations  subsequent to the disclosure. 

The oral and written comments presented by the parties were 

considered and, where appropriate, the Commission's  findings were 

modified  to take account of them. 

(7)  The investigation of dumping covered the period 1 June 1992 to 31 

May 1993  (investigation period). 

III. 

PRODUCT UNDER CONSIDERATION, LIKE PRODUCT AND COMMUNITY  INDUSTRY 

a) 

Product  description 

(8)  The product under consideration is the same as that described  in 

the Regulation subject to review. 

The product  is potassium chloride  (hereafter potash) and is 

generally used as an agricultural fertiliser.  The potassium 

content  is variable and is expressed as the percentage of the 

weight of the dry anhydrous product represented by K20.  There are 

three basic specifications: 

potash with a K20 content of 40% or less, falling within CN Code 

3104 20 10; 

-  potash with a K20 content of over 40% K20 but  less than or equal to 

62%,  falling within CN Code 3104 20 50; 

-  potash with a K20 content of over 62% falling within CN code 

3104 20 90. 

The above specifications cover three grades of a single product 

which  is available either as a powder or in a granulated  form, with 

no significant difference  in basic physical characteristics, 

application or use. 

b) Like product 

(9)  The Commission found that the conclusions of the Regulation subject 

to review are still valid and that potash produced  in the Community 

and Canada is a like product to that exported  from Belarus, Russia 

and Ukraine to the Community. 

IV. 

DUMPING 

a) Normal value 

1. Analogue country 

(10)  Since Belarus, Russia and Ukraine are non-market economy countries, 

normal value had to be determined on the basis of  information 

obtained  in a market economy third country,  i.e. an analogue 

country,  in accordance with Article 2  (5) of the basic Regulation. 

For this purpose, the complaining Community  industry  suggested 

establishing normal value on the basis of information obtained  in 

Canada. 

(11)  After examination of the suggestion made by the complainant, the 

Commission concluded that Canada was an appropriate and reasonable 

choice for the following reasons: 

6 -

Canada is known to be the largest producer world-wide of this 

product  and there is, to a large extent, similarity of the 

manufacturing process and access to raw materials between Canada 

and the non-market economy countries considered. 

Domestic prices in Canada are governed by normal market forces 

given the level of demand in the market and the number of producers 

in competition. 

A comparison between the volumes exported to the Community by 

Canada and the volume on which normal value was based showed that 

potash was sold in sufficient quantities on the domestic market to 

allow an adequate calculation of normal value. 

2. Normal value 

(12)  Only one producer finally agreed to cooperate, the Toronto-based 

Potash Company of Canada Limited.  The Commission carried out 

checks on the data supplied by this producer and its mining 

subsidiary. 

(13)  In order to determine whether normal value could be based, in 

accordance with Article 2.5(a)(i) of the Basic Regulation, on the 

prices at which potash was sold for consumption  in Canada, the 

Commission compared them with production costs to ensure that these 

prices generated a reasonable profit in normal trading.  When 

examining the costs of production of the producer concerned, the 

Commission found that they were increased by notional  amounts 

corresponding  to exceptional depreciation resulting from its recent 

change of ownership and financial expenses which should have been 

borne by this producer.  However, since these additional costs were 

not  incurred  in the ordinary course of trade, it was concluded that 

it would not be appropriate to make the Belarus, Russian and 

Ukraine producers bear the burden of such exceptional costs without 

any adjustment being made and that they should be deducted to 

establish the actual costs of production of Canadian potash sold on 

the domestic market.  After such deduction it was found that prices 

- 7 

practised by this producer for sales on the domestic market  in the 

ordinary course of trade permitted the recovery of all costs 

reasonably allocated in the ordinary course of trade and the 

generation of a normal profit margin. 

(14)  In these circumstances, normal value was established on the basis 

of the net weighted average price for the like product  sold for 

consumption in Canada since, for the types considered, domestic 

sales were made in sufficient quantities as compared with export 

sales to be considered representative. 

b) Export price 

(15)  In spite of the Commission's attempts to obtain information, the 

exporters thought to be concerned in Belarus, Russia and Ukraine 

refused to cooperate in the investigation.  Further, the 

information received from importers was inadequate to establish a 

reliable export price since, either the quantities  invoiced were 

too small to be regarded as representative, or the product was 

purchased through traders who failed to cooperate, or the importer 

was related to a non-cooperating producer  in the countries 

concerned. 

In addition, when seeking the information necessary to establish 

the export price, the Commission received strong indications  from 

several sources that discrepancies existed between the prices 

practised on the Community market and the minimum price imposed by 

the Regulation subject to review.  The possibility of circumvention 

of the minimum prices could not be overlooked.  For these reasons, 

the Commission could not rely on the statistical  information 

available on either the values or the quantities of imports of the 

product concerned. 

(16)  However, in view of the nature of this review, which is, inter 

alia, to examine the appropriateness of the level and type of anti 

dumping duty for the purpose of preventing dumped imports from 

causing  injury, and the fact that the duty which applies at present 

8 -

is a minimum price duty, it was not necessary to establish the 

current level of export prices.  It was merely necessary to 

estimate what the level of export prices would be if there were no 

protective duties.  For this purpose, it was considered  in the 

absence of cooperation on the part of producers  in the exporting 

countries concerned, that export prices would bear the same 

relationship to other prices on the Community market as found 

during the original  investigation.  Since prices on the Community 

market would not be lower in the absence of the measures now in 

force, this method cannot lead to an underestimate of the export 

prices which would prevail in the absence of duties.  It has to be 

noted that, since the information available did not allow a 

differentiation of the export price according to the countries 

concerned, the export price has been established on the same basis, 

at the ex-national frontier level for Belarus, Russia and Ukraine. 

c. Comparison 

(17)  Normal value was compared with export prices at the ex-national 

frontier stage, transaction by transaction.  For the purpose of 

ensuring a fair comparison, due allowances in the form of 

adjustments were made for the differences affecting price 

comparability, such as differences in selling expenses, in 

particular  in respect of credit terms, transport, insurance and 

handling costs and packing. 

d. Dumping margin 

(18)  The comparison showed the existence of dumping, the dumping margins 

being equal to the amount by which the normal value, as established 

above, exceeded the price for export to the Community.  For the 

reasons stated  in recitals 10 and 16, the information available to 

the Commission to establish the export price did not allow a 

differentiation according to the countries concerned.  Therefore, a 

single dumping margin was established  for each of the three 

countries  in question. 

The weighted average dumping margin for the countries  concerned 

expressed as a percentage of the CIF-Community-frontier prices, 

9 -

customs duty unpaid  is 46%.  The Council confirms this conclusion 

and the findings of the Commission underlying the establishment of 

this dumping margin. 

V. 

INJURY 

(19)  In accordance with Article  14 of the Basic Regulation, the 

investigation sought to determine the extent of any changes in the 

circumstances established by the Regulation subject to review 

(1986-1990) with regard to the behaviour of the exporters on the 

Community market or the situation of the Community industry during 

the subsequent period, independently of the anti-dumping measures 

in force. 

a) Community  industry 

(20)  In examining whether the complainant Community producers 

constituted a major proportion of the total Community production of 

the like product, the Commission noted that a German producer 

located  in the eastern part of Germany has become a party to the 

complaint  following the unification of Germany.  As a result, the 

complaining Community producers represent the totality of the 

Community production of the like product. 

(21)  It was also found that two of the Community producers had, through 

affiliated companies, imported the dumped product.  The Commission 

had, therefore, to decide whether these producers should be 

excluded  form the term Community  industry, as provided  for in 

Article 4  (5) of Regulation  (EEC) No 2423/88. 

(22)  In this respect, the consistent practice of the Community 

Institutions has been that the exclusion of such producers must be 

decided on a case-by-case basis, on reasonable and equitable 

grounds and by taking into consideration all the legal and economic 

aspects  involved.  The Institutions have, on several occasions, 

concluded that an exclusion is justified where the producers  in the 

10 

Community either participated  in the dumping practices, are 

shielded from their effects, or where they benefit unduly from 

them. 

(23)  In the present case, the Commission considered that, since these 

importing producers were independent of the exporters concerned, 

they did not participate  in the dumping practices.  Moreover, the 

level of imports  in the investigation period by these producers did 

not, on an individual basis, represent  a significant part of their 

total sales in the Community in the same period.  Such a low level 

of imports cannot, therefore, have shielded the producers  concerned 

from the effects of dumping nor have substantially benefited them. 

Indeed, the small advantages which these producers may have 

obtained from these imports are by far offset by the disadvantages 

from the dumping. 

(24)  In the light of the above circumstances, it is considered  that 

there are no reasons for the exclusion of any of the complainant 

producers  from the definition of the Community  industry. 

b) Cumulation 

(25)  To measure the impact of dumped  imports on the Community  industry, 

it must first be ascertained whether the approach adopted  in 

determining the measures under review, namely cumulation of all 

imports originating in the countries covered by the  investigation 

should be continued. 

In analysing whether cumulation of the imports from the three 

countries concerned  is appropriate, it was found that potassium 

chloride  imported  from each of them was alike in all respects, and 

interchangeable.  These imports compete with each other and with 

the like product manufactured by the Community industry.  In 

addition, the pricing in the Community of the products  from each of 

11 

the countries concerned could not be distinguished and the volume 

of the dumped  imports from each of them could not be considered 

negligible. 

It is thus considered that there are sufficient grounds to cumulate 

the dumped  imports from the countries concerned. 

c. Injury 

(26)  The Commission's  findings, based on an examination of the facts 

between 1990, which is the latest year taken into account  in the 

Regulation subject to review and May 1993, are as follows: 

1. Community consumption, volume and price of the dumped imports. 

(27)  Community consumption declined from 4.5 million tonnes to  3.9 

million tonnes, i.e. by 14%, and the dumped imports showed a 

similar decrease, thus maintaining their market share at almost the 

same level, i.e. approximately 12%. 

(28)  In the absence of any cooperation on the part of the exporters and, 

given the inadequate and non-representative information provided by 

importers, the Commission was unable to make an appropriate price 

undercutting determination.  However, it received  strong 

indications from several reliable sources that the selling prices 

of the dumped  imports  in the Community were significantly below the 

prices of potash sold by the Community industry, and actually far 

below the minimum price set by the Regulation subject to review. 

2. Situation of the Community  industry 

(i)  Production, capacity, utilization rate 

(29)  Community production fell from 5.5 million tonnes to 4.5  million 

tonnes,  i.e. a decrease of 18%.  Production capacity remained 

almost stable at approximately 6.5 million tonnes, the utilization 

rate therefore decreased  from 84% to 70%. 

12 -

(ii)  Sales and market  share 

(30)  The quantity of potash sold in the Community by the Community 

industry fell from 3.4 million tonnes to 2.8 million tonnes, i.e. a 

decrease of 18%, while its market share declined from 74.9% to 

73.5%. 

(iii) Prices 

(31)  The Community  industry has been unable to raise its prices, even 

after the imposition of protective measures by the Regulation 

subject to review, and has sustained, on the contrary, a further 

decline of  its selling prices. 

(iv.) Profitability 

(32)  The Community industry could not recover from the losses it 

incurred previously.  These losses, which are clearly related to 

the above decline of its selling price and the negative  impact of 

the decreasing utilization rate on the allocation of fixed costs, 

remained at a high level and attained 26% at the end of the period 

examined. 

(v.)  Employment 

(33)  It should be noted that the potash industry involved underground 

mining and  is thus labour intensive.  A sharp and steady 

curtailment  of the workforce has been observed over the period 

examined. 

3. Conclusion 

(34)  In the light of the above, it is apparent that, while material 

injury has been established by the Regulation subject to review for 

the period  1986 to 1990, the examination of the facts demonstrates 

that material  injury has persisted  in the subsequent period  from 

- 13 -

1990 to May 1993.  In fact, the situation of the Community  industry 

has further deteriorated  in spite of the imposition of the 

protective measures  in 1992.  This is indicated  in particular by 

the further decrease of its prices and recent aggravation of its 

losses. 

The Council confirms these views and concludes that the level of 

injury established by the Regulation subject to review has not been 

removed but merely been aggravated. 

e. Causality 

(35)  When determining whether any changes had occurred  in the causal 

link established by the Regulation subject to review between the 

dumped  imports from Belarus, Russia and Ukraine and the material 

injury, the Commission has examined the developments  since the 

prior period of investigation which ended in 1990.  Since the 

latter year, the situation has remained the same as that described 

in the Regulation subject to review, insofar as the poor 

performance of the Community industry has continued to coincide 

with the dumped  imports maintaining the same level of market  share 

and the persistence of price undercutting behaviour on their part. 

f. Effect of other factors 

(36)  It has also been examined whether the existence and  subsequent 

aggravation of the material  injury could be attributed  to the 

effect of other factors, such as the effect of other imports, 

contraction  in demand or internal management problems  in the 

Community  industry. 

As to the effect of other imports, it was found that their market 

share remained relatively stable over the period examined, while no 

conclusion could be drawn from the information available to the 

Commission about the level of their prices.  Concerning  contraction 

in demand, and the management of the Community  industry, the 

- 14 

Commission found no evidence to suggest that the material  injury 

suffered by the Community industry could be attributed  to any of 

these factors. 

The Commission therefore concludes that, although it cannot be 

ruled out that some of the above factors might have had an adverse 

effect on the situation of the Community industry, the dumped 

imports from Belarus, Russia and Ukraine have, taken in isolation, 

caused material  injury to the Community industry. 

(37)  The Council confirms this conclusion. 

VI. 

COMMUNITY  INTEREST 

(38)  The Commission found that the conclusion on Community interest set 

out  in the Regulation subject to review should remain unchanged, 

since the development of the facts underlying these conclusions in 

the subsequent period have only strengthened the case for the 

imposition of protective measures. 

(39)  Indeed, not only it is in the fundamental  interest of the Community 

to put an end to distortions of commercial practices, but, in this 

specific case, the endangering of thousands of jobs in an ailing 

sector and the precarity of the financial situation of the 

Community  industry have recently become even more acute. 

(40)  In these circumstances, it is in the Community interest  that 

protective measures are maintained and adapted to the findings made 

in the present review.  Since these findings show increased  dumping 

and a further aggravation of injury, the Community  interest  calls 

for an amendment of the measures in force. 

VII. 

DUTY 

(41)  In order to adapt the existing measures to the changed 

circumstances and to prevent the recurrence of further  injury, the 

Commission took account of the fact that  injury consisted, in 

15 

particular, of price depression and suppression, lack of 

profitability and losses.  The removal of such injury requires 

therefore that the industry should be put  in the position where 

prices can be  increased to profitable levels without  loss of sales 

volume.  In order to calculate the necessary price increase, the 

Commission considered that the prices of the dumped imports, as 

determined in recital 16, should be compared to the selling prices 

that reflect the costs of production of the Community industry plus 

a reasonable amount of profit. 

To this end, the Commission has used the actual average cost of 

production of the Community industry and a profit margin of  9% 

necessary to ensure the viability of this industry. 

The difference between these two prices expressed on a weighted 

average basis and as a percentage of the free-at-Community-frontier 

price represent the injury threshold, which was found to exceed the 

margin of dumping established.  In these circumstances, the duty to 

be imposed should be limited to the margin of dumping. 

42. 

In view of the strong indications that circumvention of the previous minimum price duty occurred 
and  the  potential  which  exists  for  compensatory  arrangements  in  this  sector,  it  is  necessary  to 
impose  a  duty  in  the  form  of  a fixed  amount  per  ton  of  imported  potash  corresponding  to  the 
dumping  margin calculated as described above.  Further, it is considered that in view, on the one 
hand, of high overcapacity for the production  of potash in the exporting countries concerned, the 
lack of domestic purchasers and the corresponding availability of large quantities for export and, on 
the other hand, the  relative attractiveness of the Community market compared with  other  export 
markets  due  to  the  high  level  of  prices  and  spending  power  of  users,  its  proximity  and  the 
availability of a high developed transport infrastructure,  there is a possibility that the exporters will 
respond to the imposition of this duty by further lowering their export prices.  This danger is further 
exaceibated by the fact  that  exports could be made available at very low prices due to currency 
problems in the exporting countries concerned and the fact that the prevalence of long term supply 
contracts in the Community can make the offering of potash to users in the Community at very low 
prices  attractive  to exporters.  To guard  against  such  an  increase  in  dumping,  it  is  considered 
necessary to also provide that if the price of the imported product should fall below a minimum price 
established on the basis of the normal value, the duty to be imposed should be the difference between 
the import price and the minimum price.  Such a system is justified  in view of the clear risk of an 
increase in the dumping margin. 

16 -

HAS ADOPTED THIS REGULATION:: 

Article  1 of Regulation  (EEC) No 3068/92 is hereby replaced by the 

following: 

Article 1 

1. 

A definitive anti-dumping duty is hereby imposed on imports of 

potassium chloride  (KCl) falling within CN Codes 3104 20 10, 3104 20 50, 

3104 20  90, originating  in Belarus, Russia and Ukraine. 

2. 

The amount of duty shall be equal to the fixed amount per tonne of 

KCL shown below per type and grade, or the difference between the prices 

shown below and the net, free-at-Community-frontier paid price per tonne 

KCL before customs clearance  for the corresponding type and grade, 

whichever  is the higher: 

Potassium 

Fixed amount 

Price 

Taric code 

chloride with a 

of duty per 

CIF  Community 

K20 content of 

tonne KCl 

border 

40% or less 

standard grade 

granular grade 

24.19 ECU 

27.37 ECU 

76.79 ECU 

86.91 ECU 

3104 2010'10 

3104 2010'20 

Over 40% but 

less than or 

equal to 62% 

standard grade 

36.28 ECU 

115.19 ECU 

3104 2050*10 

granular grade 

41.06 ECU 

130.36 ECU 

3104 2050'20 

over 62% 

standard grade 

44.13 ECU 

137.28 ECU 

17 

3.  The provisions  in force with regard to customs duties shall apply. 

Article 2 

This Regulation shall enter  into force on the day following its 

publication  in the Official Journal of the European Communities. 

This Regulation shall be binding in its entirety and directly applicable 

in all Member States. 

Done at Brussels, 

For the Council 

•n 

ISSN 0254-1475 

COM (94) 45 final 

EN 

11 02 

Catalogue number : CB-CO-94-052-EN-C 

ISBN 92-77-65425-2 

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