Proposal for a Council Regulation imposing definitive anti-dumping duties on imports of urea ammonium nitrate solutions originating in Poland
Date: 2001-04-10
Institutions: European Commission
Subjects: Poland, anti-dumping duty, chemical fertiliser, import, originating product

COMMISSION OF THE EUROPEAN COMMUNITIES

Brussels, 10.04.2001
COM(2001) 203 final

Proposal for a

COUNCIL REGULATION

imposing definitive anti-dumping duties on imports of urea ammonium nitrate solutions
originating in Poland

(presented by the Commission)

EXPLANATORY MEMORANDUM

On 21 December 1999, the Commission initiated an expiry review investigation of the
measures in force in respect of imports of urea ammonium nitrate solutions originating in
Poland, after receipt of a request made by the Community producers, indicating that the
expiry of the measures would be likely to lead to a continuation or recurrence of injurious
dumping. At the same time, the Commission initiated an ex officio interim review, limited to
the form of the measures, in order to ensure the effectiveness of these measures taking into
account those measures subsequently imposed on imports originating in other countries and
concerning the same product.

The attached proposal for a Council Regulation is based on the findings on dumping, injury
and Community interest and on the analysis of the possible effects of the removal or
maintenance of the measures in force.

The investigation confirmed the likelihood of recurrence of injurious dumping should the
measures be repealed in respect of the country concerned.

The investigation also confirmed that the most appropriate and efficient form of measures for
the product concerned would be a specific duty per tonne.

It is, therefore, proposed that the Council adopts the attached proposal for a Regulation by
which the existing measures would be prolonged.

2

Proposal for a

COUNCIL REGULATION

imposing definitive anti-dumping duties on imports of urea ammonium nitrate solutions
originating in Poland

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 Community1, as last
amended by Regulation (EC) No 2238/20002, and in particular Articles 11(2) and 11(3)
thereof,

Having regard to the proposal submitted by the Commission, after consulting the Advisory
Committee,

Whereas:

A. PREVIOUS INVESTIGATION

(1)

(2)

By Regulation (EC) No 3319/943, the Council imposed a definitive anti-dumping duty
on imports of urea ammonium nitrate solutions ('UAN') originating in Bulgaria and
Poland. The measures applying to imports from Bulgaria consisted of a specific duty,
except for one producer and one exporter from whom a joint undertaking was accepted
by Commission Decision 94/825/EC4. Polish imports of UAN were made subject to a
variable duty based on a minimum import price when directly invoiced by certain
companies to an unrelated importer. In all other cases, imports of UAN from Poland
were subject to a specific duty.

B. INVESTIGATIONS CONCERNING OTHER COUNTRIES

By Regulation (EC) No 1995/20005, the Council imposed definitive anti-dumping
duties on imports of UAN originating in Algeria, Belarus, Lithuania, Russia, and
Ukraine. It was established that
the imports of UAN originating in these other
countries were dumped and had caused material injury to the Community industry. It
was considered appropriate to impose duties in the form of a specific amount per
tonne, in order to ensure the efficiency of the measures and to discourage any price
manipulation.

1

2

3

4

5

OJ L 56, 6.3.1996, p.1.
OJ L 257, 11.10.2000, p.2.
OJ L 350, 31.12.1994, p. 20.
OJ L 350, 31.12.1994, p. 115.
OJ L 238, 22.9.2000, p. 15.

3

(3)

(4)

(5)

(6)

(7)

C. PRESENT INVESTIGATION

Following the publication, in June 19996, of a notice of the impending expiry of the
anti-dumping measures in force, the Commission received a request for an expiry
review lodged by the European Fertiliser Manufacturers Association (EFMA) on
behalf of a major proportion of Community producers of UAN (‘applicant Community
producers’). The request alleged that injurious dumping of imports originating in
Poland would be likely to recur if measures expired. The applicant Community
producers did not request the initiation of an expiry review concerning imports
originating in Bulgaria on the grounds that such recurrence was not
likely for
Bulgarian imports. Consequently the measures applicable to imports originating in
Bulgaria expired on 1 January 2000.

Having determined, after consultation of the Advisory Committee, that sufficient
evidence existed for
the Commission initiated an
investigation pursuant to Article 11(2) of the Council Regulation (EC) No 384/967 (the
‘Basic Regulation’).

the initiation of a review,

the same time,

likewise after consultation of the Advisory Committee,

At
the
Commission initiated an ex officio interim review pursuant to Article 11(3) of the
Basic Regulation, limited to the form of the measures in force with respect to the
imports originating in Poland.8 The Commission initiated this interim review in order
to allow for a possible adaptation of the type of measures for Poland, in the event of
the measures against Polish imports being maintained, taking into account the need to
ensure the effectiveness of the measures and the form of measures which might
eventually be imposed on imports of the same product originating in other countries.

The investigation into the continuation and/or recurrence of dumping and injury
covered the period from 1 January 1999 to 30 November 1999 (‘IP’). The examination
of the trends relevant for the assessment of a likelihood of a continuation and/or
recurrence of injury covered the period from 1 January 1995 up to the end of the IP
(‘period under review’).

The Commission officially advised the applicant Community producers, the exporter
and exporting producers in Poland, importers/traders, their representative associations,
associations of users known to be concerned, and the representatives of the Polish
Government of the initiation of the review. The Commission sent questionnaires to all
these parties and to those who made themselves known within the time limit set in the
notice of initiation. The Commission also gave the parties directly concerned the
opportunity to make their views known in writing and to request a hearing.

(8)

The following Community producers replied to the questionnaire:

(a) Agrolinz Melamin GmbH, ADM – Linz, Austria

(b) DSM Agro BV – Sittard, Netherlands

6

7

8

OJ C 176/14, 22.6.1999.
OJ L 56, 6.3.1996, p. 1., Regulation as last amended by Council Regulation (EC) No 2238/2000,
OJ L 257, 11.10.2000, p. 2.
OJ C 369, 21.12.1999, p. 22.

4

(c) Fertiberia S.A – Madrid, Spain

(d) Grande Paroisse SA – Paris, France

(e) Hydro Agri Chafers – Immingham, United Kingdom

(f) Hydro Agri France – Nanterre, France

(g) Hydro Agri Rostock – Rostock, Germany

(h) Hydro Agri Sluiskil BV – Sluiskil, Netherlands

(i) Kemira Agro Rozenburg B.V. – Rotterdam, Netherlands

(j) SKW Stickstoffwerke Piesteritz GmbH – Wittenberg, Germany

(9)

In view of the fact that the information provided by these same Community producers
was duly verified in the framework of the mentioned proceeding concerning imports
of UAN originating in Algeria, Belarus, Lithuania, Russia and Ukraine, for which the
investigation covered the years 1995 to 1998 as well as five months of the present IP,
it was considered appropriate, in the current proceeding, not to carry out additional
verification visits at the premises of the companies in question. However, the accuracy
of the data provided was verified by examining their coherence and consistency with
the previously verified data.

(10)

The Commission sent out questionnaires to 20 unrelated importers/traders and to one
association of importers. Nine answers were received including the one from the
association. None of these importers provided any specific figures since they did not
import UAN from Poland during the period under review and accordingly no
verification visit was carried out.

(11)

Following the receipt of a questionnaire reply, verification visits were also carried out
at the premises of the following companies:

(a) Zakladay Azotowe “Pulawy” S.A., Pulawy (‘ZAP’), an exporting producer

(b) CIECH S.A., Warsaw, an exporter

D. PRODUCT UNDER CONSIDERATION AND LIKE PRODUCT

(12)

The product under consideration in this proceeding is urea ammonium nitrate solution,
falling within CN code 3102 80 00. It is the same as in the original investigation, i.e. a
liquid fertiliser commonly used in agriculture. It consists of a mixture of urea and
ammonium nitrate in water. The water content is approximately 70% of the mixture
(depending on the nitrogen content), the remaining part consisting equally of urea and
ammonium nitrate. The nitrogen (N) content is the most significant element of the
product, and it can vary between 28% and 32%.

(13) As the previous investigation has shown, UAN is a pure commodity product, having
the same basic physical and chemical characteristics whatever the country of origin.
Therefore UAN produced and sold in the Community by the applicant Community
producers and UAN produced in Poland and sold domestically or exported to the

5

Community are considered to be like products, within the meaning of Article 1(4) of
the Basic Regulation.

E. LIKELIHOOD OF A RECURRENCE OF DUMPING

1. Preliminary remark

(14) Under Article 11(2) of the Basic Regulation, the purpose of this type of review is to
determine whether or not the expiry of the measures would be likely to lead to a
continuation or recurrence of dumping. Since there were no imports of the product
under consideration from Poland to the Community during the IP, the analysis focused
on whether the removal of the measures would be likely to lead to a recurrence of
dumping in significant volumes. In this respect, the pricing behaviour of Polish
producers on third country markets was examined in order to determine whether the
product under consideration was sold there at dumped prices. It has been further
assessed whether, should the measures be repealed, the Polish producers would be
likely to resume exporting UAN to the Community following the same pricing
behaviour.

(15)

It is recalled that, in the original investigation, the individual dumping margins found
for the two producers amounted to 40% and 27% respectively. The investigation did
not
than the two
aforementioned producers.

the existence of any Polish UAN producers other

reveal

(16) One company did not provide any detailed information on sales to other countries,
domestic sales or cost of production, and was accordingly informed that the findings
would be established on the basis of the facts available, in accordance with Article 18
of the Basic Regulation, if the information was not submitted within a set time limit.
No information was submitted subsequently by the company. It should be noted that,
on the basis of information available, this company had a much smaller production
capacity than the co-operating one.

2. Exports to third countries

(a) Export price

(17)

(18)

Exports by the co-operating producer were made directly to independent importers in
other countries, mainly to the North American market which accounted for a high
proportion (two thirds) of the company’s total exports in the IP, and a smaller
proportion (one third) to the Czech Republic. Polish exports to the USA and Canada
accounted for a not insignificant part of combined total imports by these two countries,
and represented a significant proportion of the producer’s output.

it was considered that

In view of the nature of this investigation,
it would be
unreasonable to request, for the purpose of a likelihood of recurrence of dumping test,
detailed information on exports for the whole IP. Instead, information was requested
on all transactions covering the last three month period included in the IP. The export
price was therefore determined on the basis of the prices paid or payable by unrelated
importers in third countries during the said three month period. The co-operating
producer challenged this approach at a later stage in the procedure and requested that
data concerning the whole IP be used. In view of the lateness of the suggestion, it was
not considered practicable to alter the basis of the analysis. Furthermore, even if

6

unverified data for previous months were to be taken into account, the picture would
not change so significantly to alter the conclusions found regarding exports to third
countries from Poland.

(b) Normal value

(19)

it was first determined that

For the co-operating producer,
the total volume of
domestic sales of UAN was representative in relation to export sales. Indeed, the sales
volume on the Polish domestic market was higher than the sales volume exported to
third countries. It was then determined whether these domestic sales had been made in
the ordinary course of trade. In this regard, the investigation showed that the volume
of sales above unit production cost represented more than 10% but less than 80% of all
sales. Therefore normal value was established on the basis of the prices actually paid
for all profitable sales of the product under consideration.

(c) Conclusion on exports to third countries

(20)

(21)

For the co-operating producer, the normal value was compared with the export price
for each country of destination on a weighted average to weighted average basis, after
making certain adjustments to ensure a fair comparison.

It was found that the export prices charged by the co-operating producer (which
accounted for 90% of total Polish exports in the IP) to the North American market
were substantially below the normal value established for it, resulting in significant
dumping margins in respect of its sales to both the USA and Canada. The export sales
to these two countries accounted for two thirds of total export sales of this company.
With regard to sales to the Czech Republic, a neighbouring market which accounted
for the remaining one third of the company’s total exports, little or no dumping was
found. Indeed, the company adopted the same price strategy as for its domestic
market.

(22)

Since the other producer failed to provide detailed information, no calculations were
made. It should be noted that this producer only exported to the Czech Republic, in
relatively low volumes.

3. Potential for a rise in dumped exports to the Community

(23)

The investigation established that Polish companies have the capacity to produce
significant additional volumes for export to the Community. These additional volumes
could well reach the significant levels found for the IP of the original investigation.
Moreover, these exports would in all likelihood be made at dumped prices.

(a) Co-operating exporting producer

(24) Given the co-operating producer’s relatively low level of capacity utilisation in the IP,
there is room for a considerable increase in production. There is also a real possibility
the
of shifting production from ammonium nitrate to UAN, given the fact
additional equipment required for producing UAN would not
involve any major
investment.

that

(25)

Should the measures be repealed,
the Community market might become more
attractive for Polish producers than the North American market. As a matter of fact,
the investigation showed that, during the IP, UAN prices on the North American

7

market were slightly lower than prices on the Community market. Moreover, this latter
is considered more attractive by Polish exporting producers due to its
market
geographical proximity, which entails cheaper transport costs. Thus, for the same
selling price charged on the North American market, Polish exporting producers could
achieve a higher margin on the Community market. Indeed, if the same or a slightly
lower selling price were to be charged to Community customers, such a price would
still be dumped, despite the lower transport costs. Moreover, in view of the co-
operating producer’s low capacity utilisation rate, it has every economic interest in
selling at even lower prices as long as its variable costs are covered and as long as
there is no risk of endangering the prices charged to the US. It should be recalled that
the Community market used to be Poland’s major export market for UAN before the
imposition of anti-dumping duties. Moreover, even when measures were in force, in
particular during 1996 when the Community market price was above the minimum
import price imposed by the measures, approximately 50% of Polish production was
exported to the Community.

In addition, following the imposition of anti-dumping measures on imports of UAN
originating in Algeria, Belarus, Lithuania, Russia and Ukraine, there will be greater
opportunities for other producers/exporters to regain market share.

The co-operating exporting producer argued, on the basis of sales projections, that in
the future it would no longer be in a position to export UAN to the Community
market. The reasons for this were (i) the expected significant increase in its domestic
sales of ammonium nitrate, limiting the availability of ammonium nitrate for the
production of UAN, and (ii) the growing domestic market for UAN.

Even though the investigation confirmed that domestic sales of ammonium nitrate had
indeed significantly increased between 1998 and 1999, this increase started from
relatively low levels because domestic consumption decreased by 15% between 1996
and 1998. It is expected that these domestic sales will remain at the 1999 level or
increase only slightly in the future. This has even been confirmed by the Polish co-
operating producer’s own sales figures for the first eight months of the year 2000. It
seems, therefore, that the large increase in domestic sales between 1998 and 1999
should be considered exceptional.

(26)

(27)

(28)

(29) As far as the development of domestic sales of UAN is concerned, it is clear from the
Polish co-operating producer’s sales figures for the first eight months of the year 2000
in fact increased far less than forecast.

(30)

Furthermore, it has been found that a considerable volume of UAN was again exported
to the EC in the year 2000. Indeed, in the period from January to October 2000, total
exports of UAN from Poland to the EC amounted to 5% of Community consumption
in the IP.

(b) Non co-operating producer

(31)

The second Polish exporting producer was found to have exported a significant
volume to the Community in 1996 while the Community market price was temporarily
above the minimum import price. During the previous investigation, it was found that
this producer had a significant production capacity and there is no indication that this
has changed. From this it can be concluded that
the company is potentially a
significant exporter to the Community should anti-dumping measures be repealed. In

8

the absence of co-operation from this producer, it was concluded that its pricing
behaviour concerning any future exports to the Community would not significantly
differ from the one adopted by the other producer and from its own behaviour during
the original investigation.

(c) Conclusion on potential exports to the Community

(32) Given the above it can be concluded that the Polish exporting producers clearly have

the capacity to export large quantities of UAN at dumped prices.

(33)

The Community market used to be Poland’s major export market for UAN. Even
when measures were in force, in particular during 1996 when the Community market
price was above the minimum import price, approximately 50% of production was
exported to the Community. Should the measures be repealed, this market is likely to
become once again an attractive outlet for Polish producers.

4. Conclusion on the likelihood of a recurrence of dumping

(34)

Polish exporting producers have the capacity to significantly increase their production
volume of UAN because of their substantial unused production capacity;

(35) Any future increase in domestic consumption will not be sufficient to absorb these
possible additional volumes, which will therefore most
likely be exported. This
conclusion is reinforced by the fact that, during the period from beginning of 1995
until end of the year 1998, Polish producers exported in general a high percentage of
their production (more than 80% on average);

(36)

In the event of the measures being repealed, it is likely that most Polish exports of
UAN would be directed to the Community market due to its geographical proximity
and consequent cheaper transport costs. In addition, the imposition of anti-dumping
measures on imports of UAN originating in five other third countries might provide a
further incentive to increase exports to the Community, all the more so because the
Community market used to be Poland’s major export market for UAN before the
imposition of anti-dumping duties;

(37)

The Polish exporting producer's current apparent dumping practices on the North
American market, the price level prevailing on the Polish market and the price level
prevailing on the Community market indicate that, should Polish exports resume, there
is a strong likelihood that imports in the Community would equally be dumped.

(38)

It is therefore concluded that there is a likelihood of recurrence of dumping, should the
measures be repealed.

F. DEFINITION OF THE COMMUNITY INDUSTRY

(39)

The Community producers which replied to the questionnaire represented more than
85% of the Community production of UAN during the IP and therefore constitute the
Community industry within the meaning of Article 4(1) and Article 5(4) of the Basic
Regulation.

9

G. THE SITUATION OF THE COMMUNITY MARKET

1. Community consumption

(40)

The apparent Community consumption was established on the basis of the sales
volumes of the Community industry on the Community market, the information
contained in the complaint concerning the remaining Community producers,
the
information provided by the co-operating Polish exporting producer and Eurostat
figures. Volumes have been, where appropriate, adapted so as to correspond to UAN
solutions with a nitrogen content of 32 %.

(41) On this basis, Community consumption decreased between 1995 and 1997, from
3 155 000 to 2 882 000 tonnes. Afterwards, it significantly increased and reached the
level of 3 413 000 tonnes during the IP. This increase was especially marked between
1998 and the IP (+15%). Over the whole period under review,
the Community
consumption increased by 8.2%. .

2. Evolution of imports

(a) Import volumes

(42)

Total imports of UAN in the Community followed a downward trend during the first
three years of the period under review, from 1 565 000 tonnes in 1995 to 990 000
tonnes in 1997, and then increased to 1 482 000 tonnes during the IP. Over the whole
period under review, total imports decreased by around 5%.

(43) With respect to the volume of the Polish imports, it drastically decreased over the
period under review, in particular as from 1997, from 360 000 tonnes in 1995 to nil
during the IP. The investigation established that the trend of the Polish imports was the
result of the combination of the anti-dumping measures imposed at the end of 1994
and of the evolution of the average Community market price of UAN, as explained
below. It should be recalled that before the imposition of the measures, the Polish
imports of UAN reached the level of around 520 000 tonnes in 1992 and around
405 000 tonnes in 1993, representing at that time around 50% of all imports.

(44)

In this context, as confirmed by Council Regulation (EC) No 1995/2000, certain third
countries have benefited from the imposition of anti-dumping duties on Polish
imports. Their export volume to the Community increased from 869 000 tonnes in
1995 to 1 393 000 tonnes during the IP.

(45) As to the other third countries’ import volumes, they strongly decreased over the
period under review, representing around 21% of total imports in 1995, compared to
6% during the IP.

(b) Price evolution of the imports

(46) After the imposition of anti-dumping measures against imports of UAN originating in
Poland and Bulgaria, prices recovered until 1996. Thereafter,
imports from the five
countries concerned by Council Regulation (EC) 1995/2000 exerted a downward price
pressure on the Community market. In order to face this situation the Community
industry had no choice but follow the decreasing prices in order to keep its market
share. The Polish exporting producers were not in a position to follow the Community
market price as soon as it fell below the level of the minimum import price to which

10

their imports had been subject since the imposition of the anti-dumping measures. As a
consequence, Polish producers have withdrawn from the Community market since
1998.

3. Economic situation of the Community industry

(c) Production

(47)

The Community industry’s production of UAN increased by 10.4% between 1995 and
the IP, i.e. from 1 484 000 tonnes to 1 639 000 tonnes. The most significant increase
took place between 1996 and 1997, after the introduction of anti-dumping measures on
imports of UAN originating in Poland and Bulgaria.

(d) Capacity and capacity utilisation rates

(48)

(49)

The total production capacity of the Community industry was relatively stable over the
period under review. Capacity utilisation increased from 38% in 1995 to 43% in 1997
and subsequently fell back to 41% during the IP.

It should however be noted that the production capacity installed can be used for the
production of different fertilisers which can be sold either individually or mixed
together, as is the case for the production of UAN. The absolute level of capacity
utilisation rate as well as its development
is accordingly also affected by the
development of other fertilisers.

(e) Sales in the Community

(50) During the period under review, the sales volume of the Community industry followed
an increasing trend, which was however temporarily interrupted between 1997 and
1998. This trend should be analysed in the light of the overall market development. As
a matter of fact, the decrease of the Community industry’s sales volume between 1997
and 1998 took place when the overall market was stable, thus resulting in loss of
market shares. The increasing volume between 1998 and the IP, however, followed the
market trend. Despite the increasing trend of the sales volume, the position of the
Community industry in the market has overall deteriorated since 1997. The
Community industry was not able to take advantage of the increase in consumption
because of the pressure of the five countries concerned by Council Regulation (EC)
1995/2000.

(f) Stocks

(51)

The level of stocks is not considered to be a valid injury indicator owing to the
seasonal nature of the sales and the fact that UAN is partly stored by the producers
themselves and partly by the co-operatives of farmers, i.e. the users of the product into
consideration.

(g) Market share

(52) After a gain of 15 percentage points between 1995 and 1997, from 45.8% to 60.7%,
when the measures were taking effect, the Community industry’s market share fell,
between 1997 and the IP, by 8.4 percentage points.

11

(h) Sales prices of the Community industry

(53)

in 1995 to
The Community producers’ average net sales price decreased from 111.3
78.3 during the IP. As explained in recital (46), the fall was particularly marked
between 1996 and the IP, i.e. -32.2%.

€

(i) Profitability

(54)

The weighted average profitability of the Community industry deteriorated by 15.2
percentage points between 1995 and the IP from +4.9% to -10.3%. After having
reached a peak in 1996 (+6.2%), it deteriorated by 16.5 percentage points between that
year and the IP. This evolution should be seen in the light of the price development
experienced by the Community industry during the same period. The investigation
showed that the Community industry's sales price increased between 1995 and 1996,
whilst it afterwards started to decrease mainly because of the price pressure exerted by
imports from the five countries concerned by Council Regulation (EC) 1995/2000. It
should be recalled that, during the IP of the initial investigation (i.e. April 1992 to
March 1993), the Community industry incurred losses of more than 5%.

(55)

The return on investments broadly followed the profitability curve during the period
under review. The decreasing trend was even more marked due to the joint effect of
the decreasing profitability and increasing net
investments resulting from new
acquisitions, as described below. It should be noted that both direct investments and a
portion of investments indirectly related to the production of the product concerned
have been considered.

(j) Cash flow

(56)

The cash flow generated by the Community industry in relation to sales of UAN also
followed the profitability curve.

(k) Ability to raise capital

(57) Due to the structure of the complainant companies, i.e. the fact that the fertiliser
producers are a part of large chemical groups also dealing with other products, it was
not possible to establish the ability to raise capital for the product under consideration
only, and it was therefore considered as not being a meaningful indicator to measure
any injury.

(l) Employment and wages

(58)

Employment in the Community industry, while increasing between 1995 and 1996,
from 330 to 339 employees, decreased thereafter and reached the level of 322
employees in the IP, a decrease of 5%.

(59) With respect to overall wages, they followed a similar decline as compared to the

decrease of the number of persons employed.

(m)Upstream Investment

(60)

The most important investments of the Community industry during the period under
review took place during the years 1996 to 1998, and were related to the production
facilities for urea and nitric acid, which are both raw materials used for the production

12

of UAN solutions, but are also used for other purposes such as the production of solid
ammonium nitrate and solid urea, for which a more positive outlook existed as
compared to UAN. Direct investments related only to the last step of the production
process, i.e. the mixing of ammonium nitrate and urea, represent a minor fraction of
the figures shown above. Those direct investments remained at a relatively stable level
during the period under review.

4. Conclusion on the analysis of the situation of the Community market

(61)

The introduction of the minimum import price on Polish imports had in a first stage a
positive impact on the Community industry, which could recover from its weakened
economic situation. However, starting from the year 1997, and as confirmed by
Council Regulation (EC) No 1995/2000 imposing definitive duties on imports of UAN
originating in Algeria, Belarus, Lithuania, Russia and Ukraine, these five countries
largely contributed to a general price depression on the Community market by
decreasing their average sales price by around 35% between 1996 and 1997. By doing
so, they were able to expand their export volume to the Community, were rapidly in a
position to take over the Polish market shares, and consequently caused a significant
deterioration of the economic situation of the Community industry.

H. LIKELIHOOD OF CONTINUATION AND/OR RECURRENCE OF INJURY

(62)

In order to assess the likely effect of the expiry of the measures in force, the following
elements were considered:

(a) As explained under recitals (23) to (31):

- there are clear indications that the Polish producers have the potential to raise their
production and export volumes;

- should the measures lapse, it is likely that these additional volumes will be shipped
to the Community market;

- on the basis of the export prices established in respect of exports to North America,
the Polish exporting producers would
it is likely that, , in the absence of measures,
adopt a policy of dumped prices. These low prices, which would be charged also in
order to regain their lost market shares, are likely to further injure the Community
industry. The possibility for the Polish exporting producers to lower their prices is
confirmed by their export price behaviour on third countries markets, namely North
America.

(b) Such a price behaviour of Polish exporting producers, coupled with their ability to deliver
significant quantities of UAN, would in all likelihood have a general price-depressing
impact on what is a very price-sensitive commodity market. This in turn would lead to a
recurrence of injury in terms of decreasing sales prices of the Community industry, its
sales volumes and market shares as well as the consequent impact in terms of profitability.
In this context, it is recalled that
imports from Algeria, Belarus, Lithuania, Russia and
Ukraine recently followed the very same pricing and volume patterns and these imports
had similar effects on the Community industry as those outlined above.

(c) The Community industry is still in a difficult situation having regard in particular to its
profitability. Indeed, although the situation of the Community industry, following the
imposition of the measures under consideration, markedly improved in the first two years

13

of application of the measures, it deteriorated again, in particular as from 1997, due to the
injurious dumping from other countries’ imports, as established in Council Regulation
(EC) No 1995/2000. In this regard, should the measures against Poland be repealed, not
only would the situation of the Community industry again be put at a risk, but also the
benefit which the Community industry should derive from the measures imposed against
these other countries could be weakened or even nullified.

(63) On the basis of the above, it is concluded that, should the measures be repealed, there

is a likelihood of recurrence of injury.

1. Preliminary remark

I. COMMUNITY INTEREST

(64) According to Article 21 of the Basic Regulation,

it was examined whether a
prolongation of the existing anti-dumping measures would be against the interest of
the Community as a whole. The determination of the Community interest was based
on an appreciation of all the various interests involved, i.e. those of the Community
industry, the importers/traders as well as the users of the product under consideration.

(65)

It should be recalled that, in the previous investigation, the adoption of measures was
considered not to be against the interest of the Community. Furthermore, the fact that
the present investigation is a review, thus analysing a situation in which anti-dumping
measures have already been in place, would allow the assessment of any undue
negative impact on the parties concerned by the current anti-dumping measures.

(66) On this basis it was examined whether, despite the conclusions on the likelihood of a
recurrence of injurious dumping, compelling reasons existed which would lead to the
conclusion that it is not in the Community interest to maintain measures in this
particular case.

2. Interest of the Community industry

(67)

The Community industry has proven to be a structurally viable industry, able to adapt
to the changing conditions on the market. This was confirmed in particular by the
positive development of its situation at a time when effective competition had been
restored after the imposition of anti-dumping measures on imports originating in
Poland and Bulgaria and by the industry’s investment in state of the art production
capacity. These positive effects however lasted only for a short period since, as from
1997, dumped imports originating in certain third countries, other than Poland, caused
a strong price pressure on the Community market resulting in a new degradation of the
economic situation of the Community industry. This degradation was such that the
Community industry had to restructure its activity and close down significant nitrate
capacity during the year 2000, thus reducing jobs.

(68)

It can reasonably be expected that the Community industry will benefit from the
measures imposed by Council Regulation (EC) No 1995/2000 provided that no other
source of injurious dumping would undermine them. As outlined above, since there is
a likelihood of a recurrence of injurious dumping from Poland, it would be in the
interest of the Community industry to maintain the anti-dumping measures on imports
of UAN originating in Poland

14

3. Interest of unrelated importers/traders

(69)

(70)

The Commission sent out questionnaires to 20 unrelated importers/traders and to one
association of importers. Nine answers were received including the one from the
association.

The investigation established that none of these importers/traders had imported any
UAN from Poland during the IP. They claimed this was due to the fact that, during this
period, the average Community sales price for UAN was below the minimum import
price applicable to imports of Polish UAN. It should, however, be noted that the anti-
dumping measures imposed in 1994 on the imports of UAN originating in Poland had
in fact no significant impact on importers/traders. As shown by both the current and
the previous investigations, firstly, importers/traders do in general not only deal with
UAN but also with other fertilisers and, secondly, UAN was available from numerous
different countries of origin. This is due to the characteristics of the product under
consideration, which is, as explained above, a commodity product and identical
whatever the country of origin.

4. Interest of users

(71)

(72)

(73)

The users of the product under consideration are farmers. The Commission sent out
questionnaires to European associations of users. No replies were received.

It is to be noted that fertilisers represent a small part of total production costs of
farmers, as set out in Council Regulation (EC) No 1995/2000. Moreover, the lack of
co-operation in itself appears to confirm that this sector did not suffer any substantial
negative effect on its economic situation as a result of the measures currently in force.

In conclusion, it is unlikely that the possible impact on farmers would offset the
positive effect on the Community industry of the measures against recurrent injurious
dumping.

5. Conclusion on Community interest

(74) Given the above reasons, it is concluded that there are no compelling reasons against

the prolongation of the anti-dumping measures.

J. FORM OF THE MEASURES

(75) As stated in the notice of initiation,

the interim review was initiated by the
Commission in order to allow a possible adaptation of the form of measures for
Poland, taking into account the treatment of exports of UAN from certain third
to another anti-dumping
countries to the Community which were then subject
proceeding.

(76) Council Regulation (EC) No 1995/2000 imposing measures on imports of UAN
originating in Algeria, Belarus, Lithuania, Russia and Ukraine concluded that it was
appropriate to impose definitive duties in the form of a specific amount per tonne. The
basis for imposing such a form of measures was to ensure the efficiency of the
measures and to discourage the price manipulation which has been observed in some
previous proceedings involving the same general category of product, i.e. fertilisers.

15

(77)

Like the producers in those other cases, the Polish UAN producers are integrated,
producing a variety of different fertilisers. In addition, different fertilisers are sold to a
considerable degree via identical distributors. This opens possibilities through which
prices for different products can be compensated without this being easy to detect for
customs authorities. For these reasons, it is considered that the form of measures
applicable to imports of UAN originating in Poland should be changed to a specific
amount per tonne, in line with the measures imposed on other countries by virtue of
Council Regulation (EC) 1995/2000.

(78) One Polish exporting producer contested the proposed change of the form of measures
arguing that there was no legal basis for this change and that the minimum import
price was effective in restoring fair conditions of competition on the Community
market.

(79)

(80)

In this respect it should be recalled that the interim review regarding the form of the
measures has been initiated ex officio by the Commission, after consultation of the
Advisory Committee, pursuant to Article 11(3) of the Basic Regulation. As explained
above, the Commission initiated the review in order to allow for the possibility of
changing the form of the measures applicable to Poland to take account of any
measures subsequently imposed on other countries concerning the same product.

In addition to the possibility of compensation referred to in recital (77),
the
investigation showed that the minimum import price proved ineffective, as the product
concerned may be subject to price fluctuations. Depending on the average Community
market price, the minimum import price could either be inefficient or have the effect
of excluding Polish exports from the Community market. The imposition of anti-
dumping duties in the form of a specific duty in this instance, should therefore ensure
that the measures are both effective and efficient in eliminating the effects of injurious
dumping. Moreover, in other recent fertilisers proceedings it was found that the most
appropriate form of measures for this kind of product is a specific amount per tonne.

(81)

The amount of duty in
given below:

€

per tonne, as established by the previous investigation, is

Amount of duty

€

(

per tonne)

Zaklady Azotowe Pulawy SA

All other companies

19

22

HAS ADOPTED THIS REGULATION:

Article 1

1. A definitive anti-dumping duty is hereby imposed on imports of urea ammonium nitrate
solution originating in Poland and falling within CN code 3102 8000.

16

2. The amount of the applicable duty per tonne of product shall be as shown below for the
products manufactured by the following companies:

Country

Company

Amount of
€
duty (
per

tonne)

TARIC
additional code

POLAND

Zaklady Azotowe Pulawy SA

19

8795

Al. Tysiaclecia P.P. 13,

24-110 Pulawy

Poland

Other companies

22

8900

3.
In cases where goods have been damaged before entry into free circulation and,
therefore, the price actually paid or payable is apportioned for the determination of the
customs value pursuant to Article 145 of Commission Regulation (EEC) No 2454/93 9
, the
amount of anti-dumping duty, calculated on the basis of the amounts set above, shall be
reduced by a percentage which corresponds to the apportioning of the price actually paid or
payable.

Unless otherwise specified, the provisions in force concerning customs duties shall apply.

Article 2

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

Article 3

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

Done at Brussels,

For the Council
The President

9

OJ L 253, 11.10.1993, p.40.

17