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
Date: 1994-12-01
Institutions: European Commission
Subjects: Czechoslovakia, USSR, anti-dumping legislation, chemical product, dumping, import

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 
Slovak Republic 
Russia 
Ukraine 

0.7% 
11.8% 
28.2% 
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. 

^ J N ' T ^ n,  7.11.1987, p. 1 
2O J N ° L 5 2,  24.2.1989, p. 37 
3O J N ° C 8 7,  27.3.1993, p. 7 
4O J N ° C 4 7,  15.2.1994, p. 3 
5O J N ° L 2 0 9,  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) 

-  2 -

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 

3 -

(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: 

- 4 -

(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. 

-  6 -

(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. 

-  7 -

(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. 

-  8 -

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. 

-  9 -

(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. 

- 11 -

(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. 

-  12 

(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. 

- 14 -

(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. 

- 16 -

(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. 

-  17 -

(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. 

- 18 -

(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. 

- 19 -

(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. 

-  20 -

(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 

- Ukraine 

28.2% 

20.4% 

-  21 -

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. 

-  22 -

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. 

-  23 -

(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. 

- 24 -

(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 

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