Council Regulation (EC) No 449/98 of 23 February 1998 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: 1998-02-23
Institutions: Council of the European Union
Subjects: CIS countries, anti-dumping duty, anti-dumping legislation, chemical salt, import, originating product

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COUNCIL REGULATION (EC) No 449/98

of 23 February 1998

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 (EC) No 384/96 of
22 December 1995 on protection against dumped
imports from countries not members of the European
Community (1) hereafter referred to as the Basic Regula-
tion,

Having regard to the proposal submitted by the Commis-
sion after consulting the Advisory Committee,

Whereas:

I. PREVIOUS PROCEDURE

(1)

(2)

(3)

By Regulation (EEC) No 3068/92 (2), the Council
imposed a definitive
anti-dumping duty on
imports of potassium chloride originating in
falling within CN
Belarus, Russia and Ukraine,
codes 3104 20 10, 3104 20 50 and 3104 20 90 and
consisting
set
minimum price and the net, free-at-Community-
border price before customs clearance of
the
product concerned (‘minimum price').

the difference between a

of

By Regulation (EC) No 643/94 (3), hereafter
referred to as the ‘Regulation subject to review', the
Council amended Regulation (EEC) No 3068/92 in
anti-dumping duties on
respect of definitive
imports of potassium chloride originating in
Belarus, Russia and Ukraine, and changed the form
of the measures into a combination of a minimum
price and a fixed amount of duty per tonne.

II. REVIEW

By a notice published on 5 August 1995 (4), the
Commission, after consultation of
the Advisory
Committee and in accordance with Article 11(3) of
the Basic Regulation, initiatied an interim review.
The review was initated pursuant to a request by
the International Potash Company (IPC, Moscow),
a Russian exporter of potassium chloride on behalf
of the following Belarussian and Russian produ-

(1) OJ L 56, 6. 3. 1996, p. 1. Regulation as amended by Regula-

tion (EC) No 2331/96 (OJ L 317, 6. 12. 1996, p. 1).

(2) OJ L 308, 24. 10. 1992, p. 41.
(3) OJ L 80, 24. 3. 1994, p. 1.
(4) OJ C 201, 5. 8. 1995, p. 4.

(4)

(5)

cers: Production Amalgamation ‘Belaruskali' (Soli-
gorsk, Minsk region), PLC ‘Silvinit'
(Solikamsk,
Perm region) and PLC ‘Uralkali' (Berezniki, Perm
region). The applicant claimed that the accession
of Austria, Finland and Sweden had resulted in a
change in the circumstances on the basis of which
the measures in force had been established. It also
submitted that in 1994, export prices had to be
based on facts available whereas
it was now
prepared to cooperate. Finally, it argued that the
form of the measures, i.e. the combination of a
fixed amount of duty per tonne with a minimum
price, should be re-examined since it dispropor-
tionately impeded its normal trading activity with
limited to
the Community. The
dumping and Community interest.

review was

The Commission officially advised the producers,
exporters and importers known to be concerned,
the representatives of the exporting countries, and
gave the parties directly concerned the opportunity
to make their views known in writing and to
request a hearing. The exporter, the representatives
exporting
of
the Community
countries,
the
industry,
importers and their association made
their views known. All parties who so requested
were granted a hearing, namely:

(cid:190) the Russian exporter IPC,

(cid:190) the unrelated importer Kemira Agro Oy,

Helsinki, Finland,

(cid:190) IPC’s

related

importer

Ferchimex N.V.,

Antwerp, Belgium,

(cid:190) the European Fertiliser

Import Association

EFIA,

(cid:190) the European association of potash producers

APEP, i.e. the complainant.

and

The Commission sent questionnaires to parties
known to be concerned and received detailed
two related im-
information from the exporter,
porters
the
Community. Since Canada had been chosen as
analogue country, the Commission also sent ques-
tionnaires to Canadian companies producing the
product concerned and received detailed informa-
tion from two of them.

non-related

importers

in

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(6)

(7)

The Commission sought and verified all informa-
tion it considered necessary for the determination
of dumping and the assessment of Community
interest. The following importers related to IPC
were investigated:

(11)

(cid:190) Ferchimex N.V., Antwerp, Belgium,

(cid:190) Belurs Handels GmbH, Vienna, Austria.

Interested parties were informed in writing of the
essential facts and considerations on the basis of
which it was intended to recommend amending
the existing measures. They were also granted a
reasonable period of time 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.

(8)

The investigation of dumping covered the period 1
July 1994 to 30 June 1995.

The Regulation subject to review specified different
levels of
the anti-dumping duty for powder/
standard potash and granular potash. This distinc-
tion was based on the assumption that there were
the
no other grades than these two. However,
investigation has shown that in a particular case, a
volume of potash was imported as being neither
granular nor
standard grade potash. Therefore,
considering that the proceeding covers all types of
potash and in order to close any possible loophole,
it is considered necessary to distinguish between
‘standard grade' and ‘other than standard grade'
potash, which includes but
is not restricted to
granular grade.

Moreover, in order to prevent any circumvention of
the measures by special mixtures or blends with an
unusual high content of potash, which do not fall
under the CN codes stated above but can neverthe-
less be used as potash, these mixtures will also be
considered as part of the product concerned under
‘other than standard grade' potash.

III. PRODUCT UNDER CONSIDERATION AND

LIKE PRODUCT

2. Like product

1. Product description

(9)

The product concerned is potassium chloride
(hereafter referred to as potash), generally used as
an agricultural fertiliser, either directly (cid:190) alone or
blended with other fertilisers (cid:190) or after transfor-
mation into a complex fertiliser known as NPK
(Nitrogen, Phosphor, Potassium). The potassium
content is variable and is expressed as a pecentage
of the weight of the dry anhydrous product rep-
O (chemical formula of potassium
resented by K2
oxide). This product can generally be found under
two different grades: standard or powder grade
which, in this case, represents more than 90 % of
the imports from the countries concerned, and
granular grade. The three basic types of products,
O content, are:
based on the K2

(cid:190) potassium content not exceeding 40 % K

2O (cid:190)

CN code 3104 20 10;

(cid:190) potassium content exceeding 40 % K2

O but
to 62 % (cid:190) CN code

than or equal

less
3104 20 50;

(cid:190) potassium content over 62 % K
O (cid:190) CN code
2

3104 20 90.

(10)

The investigation covers all types, although more
than 94 % of the imports originating in the coun-
tries concerned fall within CN code 3104 20 50,
the type which also represents more than 90 % of
the potassium chloride sold on the Community
market. The investigation also covers both standard
and granular grade potassium chloride.

(12) As in the previous investigations, the Commission
established that, since there were no differences in
and chemical properties of
the physical
the
types and qualities of potash, potash
different
chosen as
produced in Canada, which was
analogue country, could be considered a like
product
to that exported from the countries
concerned, within the meaning of Article 1(4) of
the Basic Regulation.
the potash
exported from the three countries concerned and
the potash produced by the Community producers
are alike.

In addition,

IV. DUMPING

1. Cooperation level

(13)

Producers in Belarus and Russia, via their common
Russian exporter IPC, fully cooperated with the
investigation.

(14) On the other hand, no cooperation was received
from Ukraine. The representatives of Ukraine
submitted that there was no production or export
of potash from Ukraine during the investigation
period. They requested that Ukraine be excluded
from the countries concerned by the anti-dumping
proceeding. However,
the
Customs statistics (Eurostat) showed that potassium
choride of Ukrainian origin was imported into the
Community during the investigation period. More-
information received from several parties
over,

an examination of

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confirmed that there is at least one production site
in Ukraine. Under
it was
concluded that imports of potash from Ukraine
should not be excluded from the scope of
the
present review.

those circumstances,

confirm the information obtained from Potacan
and to calculate average transport costs.

(17)

It should be mentioned that the judgment of the
Court of First Instance of 28 September 1995 in
Case T-164/94, Ferchimex v. Council (1), confirmed
that the institutions had not acted illegally in using
Canada as an analogue country in the proceedings,
or in using information from Potacan.

2. Analogue country

3. Normal value

(15)

Since the countries concerned are non-market
economy countries within the meaning of Article
2(7) of the Basic Regulaiton, normal value had to
be based on information obtained in an appro-
priate market economy third-country in which the
product was produced and marketed. In the Notice
of Initiation, the Commission suggested Canada as
an appropriate analogue country, due to the fact
that:

(cid:190) Canada was the main producer and exporter of
potash world-wide, ahead of Belarus, Russia
and Ukraine,

(cid:190) the Canadian domestic market for the product
concerned was subject to normal conditions of
competition,

(cid:190) manufacturing process and access to raw ma-
terials were, to a large extent, similar in Canada
and in the countries concerned,

(cid:190) Canada had been used in the previous invest-
igations, and the circumstances had not mater-
ially changed.

(16)

IPC agreed to the choice of Canada as analogue
country. It, however, expressed opposition to the
possibility that all findings be based only on one of
the Canadian companies, namely Potash Company
of Canada (hereafter referred to as Potacan), which
it claimed was linked to the European producers
and would not be representative of the Canadian
market. The Commission sought the cooperation
of other Canadian produces, and especially of the
world’s largest potash producer, Potash Corpora-
tion of Saskatchewan (hereafter referred to as PCS).
Although PCS did not agree to cooperate with the
previous investigation,
it was now prepared to
provide information with regard to the characteris-
tics of mines in Canada, potash prices and trans-
port costs, as well as the organisation of the North
American potash market. The information thus
obtained and verified was used to cross-check and

(18) As stated above, normal value was calculated on
the basis of the data verified at the premises of the
Canadian company which cooperated fully with
the investigation: Potash Company of Canada Ltd.
producing
(Potacan), Toronto,
company the Potacan Mining Company (PMC),
Saint John.

including

its

(19)

(20)

(21)

total

export

of potash to

The Commission
established whether
first
Potacan’s total sales of potash on the Canadian
market were representative in comparison with
IPC’s
the
sales
Community of both Belarussian and Russian
origin. In accordance with Article 2(2) of the Basic
Regulation, Canadian sales were considered repres-
entative when the total sales volume of potash was
at least equal to 5 % of IPC’s total export sales
volume to the Community (so-called ‘global 5 %
test'). The global 5 % test was fulfilled.

The Commission subsequently examined whether
the potash produced and sold in Canada by
Potacan could be considered identical or directly
comparable to the potash sold for export to the
Community by IPC. Potacan’s and IPC’s standard/
powder potash were considered to be comparable
products, and so were Potacan’s and IPC’s granular
potash as, within each grade, they had the same
chemical properties and physical characteristics.

For each grade of potash sold by Potacan on the
Canadian market, i.e. standard/powder or granular
the Commission established whether
potash,
Potacan’s sales on the Canadian market were suf-
ficiently representative, within the meaning of
Article 2(2) of the Basic Regulation. Canadian sales
of a particular type or grade were considered suf-
ficiently representative when the volume of that
particular grade of potash sold on the Canadian
market by Potacan during the investigation period
represented 5 % or more of the volume of the
to the
same grade sold by IPC for export
Community.

Sales of granular potassium chloride (so-called
granular muriate of potash, hereafter referred to as
GMOP) on the Canadian market were found to be
representative.

(1) Case T-164/94, Ferchimex SA v. Council, [1995] ECR II-2681.

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standard potassium chloride (standard
Sales of
muriate of potash SMOP) on the Canadian market
were found not to be representative. Therefore, and
as in the previous investigation, Potacan’s SMOP
sales to the US market were added to its sales in
Canada, as the North American market (hereafter
‘Canadian plus US markets') can be regarded as
one market for potash. Morevoer, SMOP produced
by Potacan and sold on the US market was iden-
tical to SMOP sold by Potacan on the Canadian
market and was therefore a like product to SMOP
sold for export to the Community by IPC. Sales of
SMOP on the North American market were found
to be representative.

(22)

The Commission
examined whether
finally
Potacan’s Canadian sales of GMOP and the North
American sales of SMOP could be considered as
having been made in the ordinary course of trade,
by looking at the proportion of profitable sales of
the grade in question.

The volume of granular potash sold at a net sales
price equal
to or above the calculated cost of
production (profitable sales) represented more than
80 % of the total sales volume of that grade. For
GMOP, normal value was therefore based on the
actual Canadian price, calculated as a weighted
average of the prices of all sales of granular potash
made by Potacan during the investigation period in
Canada, whether profitable or not.

The volume of standard potash sold at a net sales
to or above the calculated cost of
price equal
production (profitable sales) represented less than
80 % but more than 10 % of
the total sales
volume of that grade. For SMOP, normal value was
therefore based on the actual North American
price, calculated as a weighted average of profitable
sales only.

igation, it was not possible to establish a separate
export price and the Commission used the infor-
mation available, i.e. provided by IPC.

(24)

IPC sold to the Community market partly via two
related importers, Ferchimex and Belurs, and
partly directly to independent customers.

In all cases where exports of potash were made to
independent customers in the Community,
the
export price was established in accordance with
Article 2(8) of the Basic Regulation,
i.e. on the
basis of export prices actually paid or payable.
However, in cases where export sales were made to
a related party, the export price was constructed
pursuant to Article 2(9) of the Basic Regulation, i.e.
on the basis of the price at which the imported
products were first resold to an independent buyer.
In such cases, adjustments were made for all costs
incurred between importation and resale and for
in order to establish a reliable
profits accruing,
export price, at
level.
the Community frontier
Based on the findings of the investigaiton, a profit
margin of 5 % was considered appropriate given
the functions performed by the related importers.

(25) During the investigation period, the majority of
in the
potash entered the Community market
framework of the inward processing regime. More-
over, a large volume of granular potash was put
into free circulation in the Community as being
neither standard nor granular potash, and therefore
under a different Customs heading which did not
attract any anti-dumping duty. The investigation
showed that this particular batch had in fact been
re-sold as regular potash and appeared to be used
as such. It was consequently decided to include
these sales of potash into the calculation of IPC’s
export price together with potash for
inward
processing, because both were covered by the
product description as stated in Chapter III.(a) of
the Regulation subject to review.

4. Export prices

(23)

IPC was the only exporter which cooperated with
the investigation. Therefore, for both Belarus and
Russia, export prices were assessed on the basis of
the information provided by IPC. Two independ-
ent importers, BASF AG, Germany and Kemira
Agro OY, Finland, also cooperated with the invest-
igation, and the information they provided was also
used to establish IPC’s export prices. As
for
Ukraine, which did not cooperate with the invest-

5. Comparison

(26)

For the purpose of ensuring a fair comparison
between the normal value and the export price,
due allowance in the form of adjustments was
made for differences affecting price comparability,
in accordance with Article 2(10) of the Basic Regu-
lation.

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Adjustments were granted when a claim was made
within the time limits set for that purpose, and
when the party concerned could demonstrate the
effect of any alleged difference on prices and price
comparability.

(a) Allowances

(27) Accordingly, allowances for differences in trans-
port, insurance, handling charges, credit, discounts
and commissions have been granted where applic-
able and justified.

(28)

(29)

(30)

ICP claimed an allowance for physical characteris-
tics between on the one hand, Russian/Belarussian
potash and, on the other hand, potash produced in
Canada. It alleged that
the quality of Russian/
Belarussian potash is lower in terms of humidity
and presence of dust. The Commission carefully
the
reviewed IPC’s arguments but
chemical properties and the production processes,
including anti-caking treatment, were equivalent
for potash produced in Russia, Belarus,
and
Canada. Therefore, no adjustment could be granted
for differences in physical characteristics.

found that

the selling price.

It should be noted that potash is a bulk product
with transport costs representing a high percentage
of
the situation
whereby there is a significant distance between the
Russian and Belarussian mines and their nearest
port or nearest frontier,
it was decided that the
comparison of normal value and export price
should be carried out on an ex-mine basis.

In view of

transport costs in Russia/
IPC had stated that
Belarus had increased and were now reaching
levels close to market prices. However, since both
countries are considered as non-market economy
countries, the Commission was not able to use
Russian or Belarussian transport costs since it is
considered that prices and costs, including trans-
port costs, do not result from normal market forces
and are thus not reliable.

rail

(31) On the other hand, transport prices for potash in
Canada were found to be market driven and there
is competition between rail companies as well as
between rail and road. Since Canada is a compet-
itive market,
fares established during the
investigation in Canada were applied to IPC’s
export price, proportionately to the distance calcu-
lated between CIS mines and the ports or frontiers
of export. The transport costs thus calculated were
deducted from FOB/DAF export prices to make
them comparable to normal values calculated at an
ex-mine level.

(b) Adjustments to reflect natural comparative

advantages

(32)

(33)

IPC requested adjustments to the normal value
calculated on the basis of Canada on the grounds
that Russian and Belarussian mines enjoyed natural
comparative advantages in terms of access to raw
materials, production process, proximity of produc-
tion to customers and special characteristics of the
product, i.e. the size of the reserves, the general
characteristics of the mines and their geographical
location, and finally the characteristics of the ore.

IPC was given the opportunity to present its argu-
ments, and both IPC and the complainant were
given various opportunities to comment on each
other’s submissions. An expert from the Canadian
Ministry of Natural Resoruces Minerals, who had
been suggested both by IPC and the Community
producers at the beginning of the investigation,
was also invited to comment on the issue.

(34) Natural comparative advantages were assessed on
the basis of their impact on costs of production
and taken into consideration only where this
impact could clearly be demonstrated and eval-
uated in terms of costs. First,
the only factors
where there seemed to be a clear natural compar-
ative advantage for Russia and Belarus were the
depth of the mines and the temperature in the
mines, which are of less importance compared to
other factors such as the quality of the ore. In
addition, as far as the depth of
the mines is
concerned, IPC could not demonstrate any impact
on production costs. Lastly,
the only factor for
which the impact on costs of production was
obvious was the mineral content or the quality of
the ore. However, it was concluded that, due to the
lower quality of the ore in Russian and Belarussian
mines, probably around 50 % more ore is neces-
sary to produce the same volume of potash, which
has a considerable negative impact on production
costs.

The various factors having been considered and on
the basis of the information available, it can be
concluded that the natural comparative advantage
of the depth of Russian and Belarussian mines is
outstripped by the disadvantage of the quality of
the ore which has, according to an independent
party, a bigger impact on costs. Taken as a whole,
it
is more likely that Russian and Belarussian
mines have an overall natural comparative disad-
vantage as compared to the Canadian mines.

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for

the Russian/Belarus mines

Therefore, an adjustment for natural comparative
advantages
as
compared to the Canadian mines was not
warranted in this case and could therefore not be
the
granted to IPC. The detailed findings of
analysis have been provided to IPC and the
Community producers.

unchanged. The Council hereby confirms the find-
ings regarding injury and causation as set out in
the Regulation subject to review, as well as the
injury elimination levels.

6. Dumping margins

VI. COMMUNITY INTEREST

(35) A dumping margin was determined respectively for
Belarus, Russia and Ukraine. As it was found that
prices varied by time period and customers, the
weighted average normal value was compared to
prices of all individual export transactions to the
Community in order to reflect the full degree of
dumping being practised.

(a) Belarus

(36)

Expressed as a percentage of
the price ‘CIF-
Community-border', the margin per grade amounts
to:

standard grade: 38,5 %

granular grade: 58,2 %

(b) Russia

(37)

Expressed as a percentage of
the price ‘CIF-
Community-border', the margin per grade amounts
to:

standard grade: 37,1 %

granular grade: 48,4 %

(c) Ukraine

(38)

In view of the lack of cooperation on the part of
Ukraine, a residual dumping margin was calculated
on the basis of the facts available, as set out in
Article 18 of the Basic Regulation. In order to
avoid rewarding non-cooperation,
the highest
dumping margin calculated for each grade was
used, i.e.:

standard grade: 38,5 %

granular grade: 58,2 %

V. INJURY AND CAUSATION

(39)

Injury was not reviewed since this investigation was
limited to the examination of dumping and
Community interest. The findings on injury and
causation from the previous investigation conse-
quently remain valid, and the injury margins

1. The Community interest investigation

(40)

In accordance with Article 21 of the Basic Regula-
tion, in order to evaluate whether the continuation
of anti-dumping measures is in the interest of the
Community as a whole, the Commission examined
the impact which the existing anti-dumping meas-
ures have had on the interested parties concerned.

(41)

To this end, questionnaires were sent to:

(cid:190) the complaining industry: Cleveland Potash
Ltd (UK), Coposa SA (E), Kali und Salz GmbH
(D), SCPA (F),

i.e.

(cid:190) the major users of the product concerned in
fertiliser manufacturers:
the Community,
BASF AG (D), Hydro Agri SA (B), DSM Agro
NV (NL), Kemira Agro OY (SF), Kemira Ince
Ltd (UK), Kemira SA (B), Kemira Denmark
A/S (DK), IFI (IRL), Fertiberia (E), Quimigal
Adubos SA (P), Grande Paroisse SA (F), Chem-
ical Industries of Northern Greece SA (GR),
Agrolinz Melamin GmbH (A),

(cid:190) importers of

like products

(through their

representative association EFIA).

Replies were received from:

(cid:190) three producers,

representing over 80 % of
total Community potash production in 1996,

(cid:190) nine fertiliser producers,

(cid:190) three EFIA members.

As far as potash producers and fertiliser producers
are concerned, all but two of the questionnaire
responses were complete enough to satisfy the
requirements. The Commission
Commission’s
carried out on-the-spot verification visits at seven
companies whose questionnaire responses were
complete. The companies investigated included
three producers and four users of potassium
chloride. It is considered that the Commission has
therefore verified a significant and representative
proportion of Community users and producers,
and that clear conclusions can be based on the data
gathered.

As for importers, three members (out of 23) of
EFIA returned a questionnaire.

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2. The potassium chloride market

(a) The Community industry

(42)

(43)

(44)

(45)

The Community industry consists of four produ-
cers, each owning one or more mining and
processing facilities. Being essentially a mining
industry, it is highly capital intensive and is char-
acterized by very high levels of investments. As a
consequence, the industry is highly sensitive to
levels of capacity utilisation, and a reduction in the
output leads to an immediate increase in the fixed
costs per unit.

In 1996, the Community industry produced 4,7
million tonnes of K2O equivalent of the product
concerned. At the time, this level of production
exceeded Community consumption by around
8 %, due to existing exports.

in the Community industry
Total employment
exceeded 13 000 direct jobs in 1996. Most of these
jobs were located in economically disadvantaged
regions of Germany, France, England and Spain
which are charecterised by structural weakness and
high unemployment rates.

The market share of the Community industry was
81,3 % in 1996, which is not abnormal
for a
product for which the impact on the price of trans-
port costs is very high.

(b) Community consumption of potash

(46) Community consumption of potash in all forms
has been stable in recent years, and was at a level
of 4,12 milion tonnes of K2O in 1992 and 4,34
million tonnes in 1996. About one-third (31 %) of
Community consumption is generally in the form
of granular grade potash fertilisers, i.e. those in the
form of potassium chloride (25 %) or potassium
sulphate (6 %). The rest (69 %) is in the form of
compound fertilisers, associated with nitrates and
phosphates (NPK and PK fertilisers).

(c) Imports of potash into the EU

(47)

The importers, members of EFIA (European Fer-
tilisers Importers Association) represent two very
types of business:
different
trading and bulk-
blending,
the latter being mainly concerned by
granular type of potash.

(48)

The volume of imports into the Community from
the countries concerned declined from 944 952
to 273 646
tonnes

in 1990 (ECU 75 million)

tonnes
41 441 tonnes (ECU 10,5 million) by 1996.

(ECU 23,5 million)

in 1994,

reaching

(49)

The total volume of imports into the Community
from third countries
increased from 1 097 083
tonnes (ECU 99,3 million) in 1990, to 1 179 871
tonnes (ECU 112,5 million)
reaching
1 453 125 tonnes (ECU 150,7 million) by 1996.

in 1994,

(d) The user industry

(50)

(51)

The user industry consists of fertiliser manufac-
turers (who use standard grade potash) and end
users i.e. farmers or bulk-blenders (who use gran-
ular grade) in the agricultural sector.

Potash is one of the three main nutrients that go
into making the NPK fertilisers which represent
the biggest part of the output of the Community
fertiliser industry. The production process for NPK
fertilisers involves transforming the basic nitrates
(N) and phosphates (P) components into an NP
compound during a series of chemical processes, at
the end of which is added the potassium chloride
(K). Since most of the added value of an NPK
fertilisers is acocunted for by the nitrogen com-
ponent, the relative contribution by the potassium
chloride in this final step of the fertilisers produc-
tion process is not large.

It should be noted that potassium can also be
added to the NPK fertilisers in the form of potas-
sium sulphate.

(52)

the chemical plants
The large-scale nature of
required in the production of fertilisers necessarily
implies that the user industry is also capital in-
tensive. Of particular note is the extent to which
the user industry in the Communtiy has had to
make significant investments to conform to the
Community’s environmental standards.

(e) Community consumption of NPK fertilisers

(53) After the reform of the common agricultural policy
in 1992, which reduced the Community’s total area
of farming land, the consumption of fertilisers in
the Community has been stable. It should be
noted that
the data available refer to the total
Community consumpution of all nutrients (N, P
and K), of which NPK complex fertilisers repre-
sent about 40 %. The total consumption of nutri-
ents
in the Community increased from 15,7
million tonnes in 1992/1993 to an estimated 17,7
million tonnes in 1995/1996.

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Official Journal of the European Communities

27. 2. 98

(54)

(55)

(56)

of

final

fertiliser

fertilisers

consumers

in the
The
Community are the farmers. These usually acquire
their
requirements through purchasing
consortia. The farmer has the choice between using
(a) straight fertilisers, (b) blends, which are simple
mechanical mixtures of straight fertilizers, or (c)
compound fertilizers,
in which each granule
contains exactly the same quantity and proportion
of different nutrients as the others. Straight fer-
tilisers and blends are cheaper than compound
fertilisers, but the latter guarantee a higher and
constant quality.

The use of
fertilisers is seasonal, especially for
nitrogen, which is not needed in spring. Fertilisers
account for 12 % of Community farmers’ costs, of
which the share accounted for by potash is 1 % to
2 % of variable costs.

3. The companies investigated

(a) Community industry

in 1994,

The Community producers’ output of standard
grade potash was 2 880 Kt in 1992, rising to 4 110
Kt
in 1996 and
falling to 3 930 Kt
projected to be 4 050 Kt in 1997. Output of gran-
ular grade was 1 030 Kt in 1992, 2170 Kt in 1994,
2310 Kt in 1996 and is projected to be 2 320 Kt in
1997. Total production of potash was therefore
3 910 Kt in 1992, 6 280 Kt in 1994, 6 240 Kt in
1996 and is projected to be 6 380 Kt in 1997.

Capacity utilisation worsened between 1992 and
1993, declining from 80 % in 1992 to 77 % in
1993. Since then, capacity utilization has been
stable at 84 %.

Total sales of potash made by the Community
producers into the EU rose from 2 564 Kt in 1992
to 3 905 Kt by 1994, and then to 4 127 Kt in 1996
and are projected to reach 4 223 Kt in 1997. Of
these, standard grade sales rose from 1 760 Kt in
1992 to 2 455 Kt in 1994, when to 2 702 Kt in
1996 and 2 558 Kt in 1997. Granular grade sales
rose from 804 Kt in 1992 to 1 450 Kt in 1994,
1 436 Kt in 1996 and 1 665 Kt in 1997.

(b) Fertiliser manufacturers

(57)

The output of NPK (made of KCl) of the cooper-
ating industry rose from 2 383 Kt in 1992 to 4 112
Kt in 1994, when declined to 3 970 Kt in 1995
and remained the same afterwards.

Capacity utilisation on a weighted average basis
was 75 % in 1992, 65 % in 1993 and 78 % in
1994 and has been 80 % since 1995.

4. Effects of the existing anti-dumping meas-

ures

(a) Impact on Community producers

(58) Community producers have benefited from the
measures in force. As mentioned above, sales and
production improved significantly throughout the
period, with some stability being achieved since
the imposition of the latest anti-dumping measures
at
the new higher levels since 1994. Levels of
investment also improved, rising from ECU 55
million in 1992 to ECU 136 million in 1994, ECU
207 million in 1995 and ECU 144 million in 1996.
On a index basis, the productivity of the Com-
munity’s producers
(measured by the quantity
rose
produced per member of staff employed)
steadily from 100 in 1992 to 121 in 1994 and 134
in 1996 for mining activities, and from 100 in
1992 to 127 in 1994 and to 152 in 1996 for
processing activities.

(59) Despite these indications of a viable performance,
however, the information available to the Commis-
sion on the weighted average level of profitability
on sales shows that, although the financial situ-
ation of the Community industry has improved,
the Community industry was still making losses on
the sales of potash in 1996. Return on sales went
from –20,4 % in 1992 to –9,6 % in 1994 but
was still at –3,6 % by 1996. After a brief improve-
ment in the figures for employment between 1992
and 1993, when there were 12 500 people
employed in the Community industry, there was a
continued decline in employment among the
Community’s producers,
reaching
10 066 by 1996.

the number

(60)

as well

investments made

The Community industry strongly argues that the
measures should be maintained. They mention the
significant
the
laying-off of workers to modernise their produc-
tion facilities. The heavy structure of the industry
(impossibility of temporarily shutting down a mine
due to too high re-opening costs) as well as its
financial
it vulnerable to any
downward price development caused by dumped
imports.

situation makes

as

(61) As shown above,

the Community industry has
increased its productivity over the period exam-
ined. Total investments of the cooperating produ-
cers have
at
also remained relatively
improved levels since the introduction of the anti-
dumping measures. Exports outside the EU made
by the industry have also increased by 55 % since
the introduction of the measures (from 1 126 Kt in
1993 to 1 741 Kt in 1996).

stable

27. 2. 98

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Official Journal of the European Communities

L 58/23

These figures demonstrate the competitiveness of
the Community industry.

is still in a loss-making situation, which could only
deteriorate if exposed to the dumped imports from
the countries concerned.

(62)

show that

figures presented above

The
the
Community industry’s market share (80 % in 1993
as against 81,3 % in 1996) did not change signi-
ficantly following the imposition of the measures.
Since the introduction of the anti-dumping meas-
ures,
its production remained stable at higher
levels. As for imports from other third countries,
the fact that the major exporting third countries
(Canada, Israel and Jordan) increased their exports
to the Community from 729 Kt in 1993 to 1 440
Kt in 1996 (this increase being greater than the
reduction from the countries concerned after the
the
imposition of
that
the measures)
from
Community users have not been cut off
alternative
the
and that
of
Community market remained open to fairly-traded
imports. In terms of market shares, imports from
other third countries increased from 12,7 % in
the same time,
1993 to 18,2 % in 1996. At
imported
their
although
countries
declined,
the
concerned (Russia, Belarus
still
amounted to a total of 421 000 tonnes (ECU 44
million) between 1994 and 1996.

quantities
from the

annual
imports

and Ukraine)

sources

supply

shows

the

(63) On a weighted average basis, 1996 prices charged
by
producers
cooperating Community
increased vis-(cid:133)-vis 1993 prices by 20 % (standard
grade) and 18 % (granular grade). On an index
basis with 1993 = 100, the price development of
standard grade over the period was 104 in 1992,
100 in 1993, 107 in 1994, 115 in 1995 and 120 in
1996. For granular grade, the development of price
on an index basis was 104 in 1992, 100 in 1993,
105 in 1994, 120 in 1995 and 118 in 1996. In this
regard, it should be noted that the expected fall in
world demand for potassium chloride bring about
an overall decrease in prices from 1997 onwards.

(64)

(65)

Since 1994,
losses on turnover for the product
concerned hayve fallen from –9,5 % to –6,5 %
(1995) and –3,6 % (1996). The Community indus-
try’s financial results show, therefore, that, despite
the measures and improved productivity, the pro-
fitability on sales of the product concerned has not
recovered to break-even levels.

anti-dumping measures,

Therefore, despite the benefits its has derived from
the Community
the
intense
industry
competition from fairly traded imports in an open
and transparent market, both at a Community and
world level. Although it has improved its results, it

remained

subject

has

to

(b) Impact on users

(66)

(67)

The user industry (the fertilisers industry) has faced
important changes in past years, the most impor-
tant of which include the decline in the use of
nitrogen-based fertilisers in the Community, and
the increased demands made on them to protect
the environment. Quantities sold of potash-based
fertilisers were 3 736 Kt in 1992, 3 608 Kt in 1993,
3 975 Kt in 1994, 3 566 Kt in 1995 and 3 747 Kt
in 1996. During the restructuring which the
industry underwent
the numbers
employed declined from 2 226 in 1992 to 1 571 in
1996. Profitability improved from 1993,
after
several years of losses (–10 % return on turnover
of the product concerned in 1993, –5 % in 1994
and 1995, –1 % in 1996 and break-even expected
for 1997). Investments have behaved erratically, but
trend has been upwards (ECU 23
the general
million in 1992, ECU 25 million in 1993, ECU 20
million in 1994, ECU 53 million in 1995 and ECU
30 million in 1996).

in the period,

The user industry has not reported any problems
of availability concerning potash. It should be
recalled that the industry still imports potash from
the countries concerned under
the regime of
inward processing, allowing it to manufacture fer-
tilisers for the export markets. Although potash is
almost a commodity type product in a fairly trans-
parent market as far as the price in concerned,
several users pointed out that ‘just in time' delivery
requirements prevented them from relying too
much on sea transported potash (like that origin-
ating in the countries concerned), due to the delays
inherent in sea freight.

(68) Apart

from the notable exception of one large
producer which favours the continuation of the
measures,
the users are generally in favour of
removing the measures, as this would to some
reduce their manufacturing cost. They
extent
nevertheless point out that, although the existing
measures have an impact on their costs, potash,
which represents about 20 % of manufacturing
costs, is not a decisive element in this respect. For
instance, the impact on their costs of the price of
in the
ammonium nitrate
economic
are
considered to be much more important.

environment mentioned above

and the

changes

L 58/24

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Official Journal of the European Communities

27. 2. 98

(69)

Farmers are only marginally direct users of raw
potash,
them is
consuming it in the form of blended or complex
fertilisers.

vast majority of

since

the

the current measures, principally increasing finan-
cial losses.

No consumers’ or farmers’ association has made
itself known in the course of the procedure. Since
the price of potash increased by 20 % following
the imposition of the measures, the Commission
argues that
the anti-
the impact on farmers of
dumping duties amounted to an increase of 0,2 %
to 0,4 % of their variable cost (assuming that the
fertiliser manufacturers pass their own cost increase
on to their customers in full). Consequently, it is
considered that the impact of the measures on the
cost structure of agricultural production can be
considered to be marginal.

6. Conclusion on Community interest

(73)

In the light of the foregoing, it is concluded that
there is no compelling reason to consider the
existing measures as being contrary to the interest
of the Community. Indeed, the measures imposed
in 1994 have had the desired effect,
the
removal of the distortions caused by unfair trade,
and the resultant overall improvement in the situ-
ation of the Community industry.

i.e.

(c) Impact on importers

(i) Opinion of the traders

(70)

the Community market

The importers’ association referred to in recital 47
is clearly against the measures, as a result of the
alleged closing of
to
imports from the countries concerned. It should be
stressed that even if imports from the countries
concerned did fall as a result of the anti-dumping
measures of 1994,
imports under the regime of
inward processing have continued. More import-
antly, there are significant imports from countries
not concerned.

(74)

there is no
Despite allegations to the contrary,
these measures have been detri-
evidence that
mental
to the degree of competition on the
Community market, where fairly-traded imports
have continued to enjoy open access and have, in
fact, increased their market share and they do not
appear to have had detrimental effects on the situ-
ation of the user industry either.

No detrimental effect on the importer industry has
been demonstrated by the investigation.

It should also be added that there is no evidence
that the accession of the three new Member States
has given rise to any reason to alter the Commis-
the
sion’s
Community in these reviews proceedings.

regarding the interest of

findings

(ii) Opinion of the bulk-blender

(71) Although the company which reacted was

in
favour of removing the measures, it also mentioned
that it could not rely entirely on imports from the
countries concerned.

5. Effects of the removal/alteration of the

measures

(72)

Since the circumstances which led to the reinforce-
ment of the measures in 1994 have not substan-
tially changed (including the stagnation of sales in
the exporters’ home markets), it is very likely that
the alteration or removal of the measures would
lead to a repeat of the injury experienced by the
Community industry prior to the introduction of

VII. UNDERTAKING

(75)

IPC made three proposals for an undertaking based
on Article 8 of the Basic Regulation.

(76)

examined

these
carefully
The Commission
proposals, and rejected them on the ground that
the undertakings would not eliminate the injurious
effect of dumping. In view of its history, this case
requires any offer of undertakings to be treated
with caution, and it was apparent that necessary
guaranteees for the acceptance of an undertaking
were not sufficiently present in the offer.

(77)

The exporter was informed of the reasons why its
undertakings could not be accepted, and was given
the opportunity to comment.

27. 2. 98

EN

Official Journal of the European Communities

L 58/25

VIII. MEASURES

corresponding type and grade, whichever is the
higher,

(78)

(79)

(80)

The present review has shown that the inclusion of
the three new Community Member States does not
alter the analysis of, nor the conclusions on, the
dumping practised by the exporters in the coun-
tries subject to investigation; indeed, the dumping
margin has changed little since the last exam-
ination.

Therefore, it is considered that the form of the
measures
should remain a combination of a
minimum price with a specific duty. However, the
minimum prices and fixed duties
should be
adapted in accordance with the findings of the
current investigation.

In application of the lesser duty rule, the proposed
anti-dumping duties amount 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 price per
tonne of KCl, before customs clearance for the

HAS ADOPTED THIS REGULATION:

Article 1

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

‘Article 1

anti-dumping duty

1. A definitive
is hereby
imposed on imports of potassium chloride 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 in ECU per ton of KCl shown below per type
and grade, or the difference between the minimum
prices in ECU shown below and the net,
free-at-
Community-frontier price per
ton KCl, before
customs clearance for the corresponding type and
grade, whichever is the higher:

BELARUS

K

2

O content not exceeding 40 %

O content exceeding 40 %
K
but less than or equal to 62 %

2

O content
K
2
over 62 %

Standard

Granular and
other than
standard

Standard

Granular and
other than
standard

TARIC code

3104 20 10*10 3104 20 10*90 3104 20 50*10 3104 20 50*90

Fixed duty

Minimum price

19,51

71,35

30,84

79,41

29,51

46,65

48,19

107,91

120,11

124,08

RUSSIA

K

2

O content not exceeding 40 %

K
O content exceeding 40 %
but less than or equal to 62 %

2

K
O content
2
over 62 %

Standard

Granular and
other than
standard

Standard

Granular and
other than
standard

TARIC code

3104 20 10*10 3104 20 10*90 3104 20 50*10 3104 20 50*90

Fixed duty

Minimum price

19,61

71,35

26,01

79,41

29,65

39,33

40,63

107,91

120,11

124,08

L 58/26

EN

Official Journal of the European Communities

27. 2. 98

UKRAINE

K

2

O content not exceeding 40 %

K2O content exceeding 40 %
but less than or equal to 62 %

K2O content
over 62 %

Standard

Granular and
other than
standard

Standard

Granular and
other than
standard

TARIC code

3104 20 10*10 3104 20 10*90 3104 20 50*10 3104 20 50*90

Fixed duty

Minimum price

19,61

71,35

30,84

79,41

29,65

46,65

48,19

107,91

120,11

124,08

3.
For the purpose of the application of the anti-dumping duty, potash imported under
a form which is neither standard nor granular will be deemed to be granular and will be
subject to the anti-dumping duty applicable to granular potash.

4.

The provisions in force with regard to Customs duties shall apply.'

This Regulation shall enter into force on the day following its publication in the Official
Journal of the European Communities.

Article 2

This Regulation shall be binding in its entirety and directly applicable in all Member
States.

Done at Brussels, 23 February 1998.

For the Council

The President

R. COOK