Proposal for a Council Regulation imposing definitive anti-dumping duty and collecting definitively the provisional anti-dumping duty imposed on imports of urea originating in Belarus, Bulgaria, Croatia, Estonia, Libya, Lithuania, Romania and the Ukraine
Date: 2002-01-04
Institutions: European Commission
Subjects: anti-dumping duty, chemical product, import, organic fertiliser, originating product, third country

COMMISSION OF THE EUROPEAN COMMUNITIES

Brussels, 4.1.2002
COM(2001) 814 final

Proposal for a

COUNCIL REGULATION

imposing definitive anti-dumping duty and collecting definitively the provisional anti-
dumping duty imposed on imports of urea originating in Belarus, Bulgaria, Croatia,
Estonia, Libya, Lithuania, Romania and the Ukraine

(presented by the Commission)

EXPLANATORY MEMORANDUM

On  21  July  2001,  the  Commission  imposed  a  provisional  anti-dumping  duty  on  imports  of
urea  originating  in  Belarus,  Bulgaria,  Croatia,  Estonia,  Libya,  Lithuania,  Romania  and  the
Ukraine.  The  proceeding  as  regards  imports  from  Egypt  and  Poland  was  terminated  since
their injury margins were de minimis.

Dumping  has  been  definitively  established  at  significant  levels  for  all  companies/countries
concerned and ranges from 10.0% to 90.3%

It was found that the Community industry suffered material injury. In particular, production
fell  7.9%,  market  share  fell  10.3%,  prices  fell  31.0%,  employment  fell  18.5%,  whilst
profitability  deteriorated  from  +27.2%  to  –2.4%  over  the  period  considered.  This  negative
evolution  took  place  against  a  background  of  increasing  Community  consumption,  and  a
marked increase in dumped imports from the countries concerned, which undercut the prices
of the Community industry. No other factors were found to break the causal link between the
injury suffered by the Community industry and the dumped imports.

As  there  are  no  compelling  reasons  that  would  make  the  imposition  of  definitive  measures
against the Community interest, it is proposed that definitive anti-dumping duties should be
imposed, ranging from €6.18 to €21.43 per tonne.

It  is,  therefore,  proposed  that  the  Council  adopt  the  attached  proposal  for  a  Council
Regulation, which should be published in the Official Journal no later than 20 January 2002.

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Proposal for a

COUNCIL REGULATION

imposing definitive anti-dumping duty and collecting definitively the provisional anti-
dumping duty imposed on imports of urea originating in Belarus, Bulgaria, Croatia,
Estonia, Libya, Lithuania, Romania and the 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  Community1,  and  in
particular Article 9 thereof,

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

Whereas:

A. PROVISIONAL MEASURES

(1)

The  Commission,  by  Regulation  (EC)  No  1497/20012  (the  provisional  Regulation)
imposed a provisional anti-dumping duty on imports of urea falling within CN codes
3102  10  10  and  3102  10  90,  and  originating  in  Belarus,  Bulgaria,  Croatia,  Estonia,
Libya, Lithuania, Romania and the Ukraine.

(2)

In the same Regulation it was decided to terminate the proceeding as regards imports
of urea originating in Egypt and Poland

B. SUBSEQUENT PROCEDURE

(3)

Subsequent to the disclosure of the  essential facts and considerations on the basis of
which it was decided to impose provisional measures on imports of urea from Belarus,
Bulgaria,  Croatia,  Estonia,  Libya,  Lithuania,  Romania  and  the  Ukraine,  several
interested  parties  submitted  comments  in  writing.  The  parties,  which  so  requested
were also granted an opportunity to be heard orally.

(4)

The Commission continued to seek and verify all information it deemed necessary for
its definitive findings.

(5)

Additional verification visits were carried out at the premises of the following:

1 
2 

OJ L 56, 6. 3. 1996, p.1, as last amended by Regulation (EC) No 2238/2000, OJ L 257, 11.10.2000, p.2.
OJ L 197, 21.07.2001, p.4

3

                                                
Community producers

– 

– 

Fertiberia, Madrid.

Hydro Agri France, Paris.

Users in the Community

– 

Libera Associazione Agricoltori Cremonesi, Cremona.

(6)

All  parties  were  informed  of  the  essential  facts  and  considerations  on  the  basis  of
which  it  is  intended  to  recommend  the  imposition  of  definitive  anti-dumping  duties
and  the  definitive  collection  of  amounts  secured  by  way  of  provisional  duties.  They
were also granted a period within which they could make representations subsequent
to this disclosure.

(7)

The oral and written comments submitted by the parties were  considered  and, where
appropriate, the provisional findings have been modified accordingly.

C. PRODUCT UNDER CONSIDERATION AND LIKE PRODUCT

(8)

In the absence of any comments, the definition of the product under consideration and
the like  product  as  described  at  recitals  (9)  to  (12)  of  the  provisional  Regulation  are
confirmed

D. DUMPING

1. Market economy countries

Normal value

Application of Article 18 of the Basic Regulation

(9)

The exporting producer in Libya claimed that recital (63) of the provisional Regulation
does  not  accurately  describe  the  level  of  co-operation  provided.  It  claimed  that  the
Commission  was  aware  and  implicitly  accepted  the  fact  that  the  overall  company
accounts  covering  all  activities  of  the  group  would  not  be  submitted  due  to
confidentiality  reasons.  It  furthermore  claimed  that  in  line  with  Libyan  accounting
requirements, no public audited accounts have to be filed and therefore, in accordance
with  Article  2(5)  of  the  Basic  Regulation,  the  Commission  should  not  have  rejected
the company’s accounts on these grounds.

(10) As far as the level of co-operation is concerned, the Commission has never given any
indication  that  it  accepted  the  company’s  refusal  to  submit  essential  accounting
documents. On the contrary, it has repeatedly informed the exporting producer of the
possible  application  of  Article  18  of  the  Basic  Regulation  including  the  use  of  best
facts available, due to the deficient level of co-operation. Nevertheless,  the company
maintained  its  position  and  did  not  submit  substantial  information  necessary  to
reconcile  in  particular  domestic  sales  and  the  cost  of  production  of  the  product
concerned. Under these circumstances, and in order to determine the normal value for
the  company  concerned,  the  Institutions  had  no  choice  but  to  make  use  of  facts
available,  and  namely  of  information  provided  in  the  complaint,  in  accordance  with
Article 18 of the Basic Regulation. In view of the above, it is incorrect to assume, as

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(11)

(12)

(13)

the company did, that the absence of publicly audited accounts was the reason for the
use of facts available in the determination of the normal value.

This  is  also  confirmed  by  the  fact  that  the  reported  data  were  used  whenever  it  was
possible to reasonably verify and reconcile it with the company’s internal accounts, in
particular  when  establishing  the  export  price  of  the  Libyan  exporting  producer  (see
recital (67) to (72) of the provisional Regulation. 

The  same  exporting  producer  claimed  that  its  normal  value  should  have  been
established on the basis of the actual domestic sales price or alternatively constructed
on the basis of the company’s own accounting data, rather than on the basis of the data
submitted by the Community industry in the complaint. It argued that, for this purpose,
all necessary evidence and information related to the production and sales of urea on
the Libyan domestic market was provided.

The  company  failed  consistently  to  submit  essential  information  in  the  reply  to  the
questionnaire and to satisfactorily explain inconsistencies and contradictions revealed
during the verification visit, despite of the fact that these  were expressly  pointed  out
by the Commission in deficiency letters and on-spot. It was therefore not possible to
establish the completeness and  correctness  of the  domestic sales reported, nor  of  the
cost of production submitted. Consequently, as far as the submission of evidence and
information related to the production and sales of urea on the Libyan domestic market
is  concerned,  the  findings  of  recital  (64)  and  (65)  of  the  provisional  Regulation  are
confirmed.

(14) As mentioned in recital (66) of the provisional Regulation, in the absence of any other
reliable  information  normal  value  for  the  exporting  producer  in  Libya  had  to  be
established on the basis of the data submitted in  the complaint in accordance  Article
18 of the Basic Regulation.

(15)

The same exporting producer claimed that, in any case, the profit margin used in the
complaint in order to construct normal value was overestimated. It argued in support
of its claim that profit margins in the urea business are traditionally low. 

(16) On the basis of the findings regarding other  co-operating exporting producers  in  this
proceeding, the Commission considered it appropriate to review the level of the profit
margin used for constructing the normal value of the exporting producer in Libya.

(17) As  outlined  in  recital  (22)  of  the  provisional  Regulation,  the  average  profit  margin
realised  by  the  co-operating  exporting  producers  in  the  present  investigation  when
selling  the  product  concerned  on  their  domestic  markets,  in  accordance  with  Article
2(6)(c) of the Basic Regulation, has been used to construct the normal value of those
exporting producers for which the profit margin could not be established in accordance
with the chapeau of Article 2(6) of the Basic Regulation or its subparagraphs (a) and
(b). Considering that no valid reason could be identified which would justify to apply
a different profit margin to the Libyan exporting producer, and in the absence of any
more appropriate information, it was decided to apply at the definitive stage this same
profit margin to the Libyan producer in order to establish normal value.

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Normal value based on domestic sales

(18)

Two  exporting  producers  in  Romania  submitted  that  normal  value  should  be
established  on  a  monthly  basis  due  to  inflation  in  Romania  during  the  investigation
period.  This  methodology  has  been  used  at  the  provisional  stage  for  all  exporting
producer in Romania.

(19) After  imposition  of  the  provisional  anti-dumping  duties,  this  approach  was  however
re-analysed. The investigation has shown that the effects of the inflation were not such
as to justify the calculation of monthly normal values. It is the Institution’s consistent
practice  to  establish  average  normal  values  for  the  investigation  period  except  in
situations  such  as  hyperinflation.  These  conditions  were  however  not  fulfilled  in  the
case of Romania. 

(20)

It  was  consequently  considered  appropriate  to  establish  the  normal  value  at  the
definitive  stage  for  each  exporting  producer  in  Romania  on  the  basis  of  the  average
price paid on the domestic market during the investigation period. 

Constructed normal value

(21)

(22)

The Community industry claimed that for the determination of the profit margin used
in the construction of normal values for the exporting producers in Bulgaria, Estonia
and  Lithuania,  the  minimum  return  on  capital  employed  “normally  necessary  to
sustain a viable urea business over the medium-long term” should have been used. It
was argued that profit margins in the above countries would in general not be reliable
due to “overhangs” of  the  non  market  economy system in the accounting policies of
the companies concerned. 

The  investigation  did  not  reveal  any  evidence  or  information  indicating  that  the
accounts of the companies concerned were not reliable and could thus not be used in
the  determination  of  the  profit  margin.  Therefore,  the  Institutions  had  no  alternative
but  to  establish  normal  values  in  accordance  with  Article  2(3)  and  (6)  of  the  Basic
Regulation. Thus, profit margins were  established in  accordance  with  Article 2(6)(b)
and  (c)  of  the  Basic  Regulation,  i.e.  on  the  basis  of  the  profit  realised  for  the  same
general category of products produced and sold by the exporting producer concerned
on  the  domestic  market  in  the  case  of  Lithuania;  and  in  the  case  of  Bulgaria  and
Estonia on any other reasonable basis, i.e. on the basis of the weighted average profit
margin found for the other co-operating exporting producers in this proceeding. 

(23) However  the  level  of  the  profit  margin  which  was  established  in  accordance  with
Article  2(6)(c)  of  the  Basic  Regulation  on  the  basis  of  the  weighted  average  profit
margins  of  co-operating  exporting  producers  with  profitable  domestic  sales  was  re-
examined.  Further  to  the  termination  of  the  proceeding  as  regards  imports  of  urea
originating  in  Egypt,  exporting  producers  from  Egypt  were  excluded  from  the
calculation of the average profit margin.

(24)

Following the comments of the Estonian exporting producer the profit margin used for
the  reconstruction  of  its  normal  value  was  reassessed.  A  re-examination  of  the
provisional findings made apparent that the profit margin used – based on the sales of
other products by the company – had to be reviewed, since these products could not be
considered  as being part of  the  same  general  category  as  the  product  concerned  (i.e.
fertilisers). Thus, in the absence of sufficient sales in the ordinary course of trade, of
any other Estonian exporters/producers of the product concerned and/or other products

6

(25)

(26)

of  the  same  general  category  sold  by  the  Estonian  company  concerned,  any  other
reasonable method has been applied at the definitive stage pursuant to Article 2(6)(c)
of  the  Basic  Regulation.  In  this  regard,  the  profit  margin  has  been  based  on  the
weighted  average  profit  margin  of  the  other  co-operating  exporting  producers
concerned (as for the Bulgarian exporting producer, see recital 22 above).

The Lithuanian exporting producer has argued against the use of SG&A and profit of
ammonium  nitrate  (AN)  in  constructing  normal  value.  It  claimed  that  urea  and
ammonium  nitrate  are  different  fertilisers,  sold  in  different  markets  and  in  different
competitive  situations,  and  with  differences  in  manufacturing  technology,  market
demand, selling prices and costs.

Since  there  is  only  one  producer  of  urea  in  Lithuania,  and  in  the  absence  of
representative domestic sales, Article 2 (6) (b) of the Basic Regulation is a possibility
for  the  determination  of  SG&A  and  profit.  Also,  urea  and  AN  are  both  nitrogen
fertilisers and, even if differences in production technology exist to some extent, they
do  belong  to  the  same  general  category  of  products,  as  required  by  the  Basic
Regulation.  For  the  sake  of  argument,  markets  and  competitive  situations  are  not
dissimilar (one producer, import competition). In view of the above, it was decided to
maintain the provisional determination.

Export price

(27)

In the absence of any comments by the interested parties, or any other findings which
could devaluate the provisional findings, the export prices of the exporting producers
concerned as established provisionally are hereby confirmed.

Comparison

Handling and loading cost

(28)

(29)

(30)

(31)

Following the comments received by the Libyan exporting producer with regard to the
calculation of loading and handling costs when exporting the product concerned to the
Community,  the  Commission  reviewed  its  calculations  and  found  a  calculation  error
which was corrected accordingly.

2. Non-market economy countries

The  exporting  producer  from  Belarus  contested  the  fact  that  the  Commission  has
allegedly  treated  it  as  a  non  co-operating  party  in  the  proceeding.  The  company
claimed  to  have  provided  to  the  Commission  all  the  information  requested  and
considered that the reason for being treated as a non co-operator was to deprive it of its
rights as a co-operating party and namely of the opportunity to offer an undertaking.

In the present investigation, the fact that the company did not provide the information
required to establish a verifiable  export  price  led to  the  application  of  the  rule set in
Article  18  of  the  Basic  Regulation  for  non-co-operating  parties  and  consequently  to
the partial use of “facts available”, in this case the export figures provided by Eurostat.

It  is  nevertheless  noted  that,  contrary  to  the  company’s  allegations,  the  partial
application of Article 18 did not deprive it of any of its rights as an interested party,
and  namely  of  the  right  to  receive  disclosure,  to  be  heard  and  to  present  written

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submissions,  to  consult  non  confidential  files  and  the  opportunity  to  offer  an
undertaking.

Market economy status (‘MES’)

(32) As outlined in recital (118) to (130) of the provisional Regulation, in accordance with
Article  2(7)(b)  of  the  Basic  Regulation,  three  companies  in  the  Ukraine  filed
applications that market economy conditions prevail in respect of the manufacture and
sale of the like product concerned (‘market economy status’ or ‘MES’). It is recalled
that  two  Ukrainian  companies  received  MES.  One  Ukrainian  exporting  producer,
which was refused MES, disagreed with the Commission’s findings on possible State
interference.

(33)

(34)

The Community industry re-iterated its claim that companies in the Ukraine producing
and  selling  nitrogen  fertilisers  including  urea,  are  subject  to  significant  State
interference and that therefore, on a general basis, no MES should have been granted.
In  particular,  it  argued  that  the  Ukrainian  fertiliser  market  was  characterised  by  the
existence  of  tolling  agreements,  barter  chain  arrangements  and  State  interference  in
energy, electricity and transportation cost, and that all these factors were incompatible
with a market economy situation. 

These  arguments  by  the  exporting  producers  and  the  Community  industry  have
already  been  treated  in  recitals  (118)  to  (130)  of  the  provisional  Regulation.  It  is
nevertheless added that concerning tolling agreements, it was considered that these are
not per se in contradiction with MES, since they cannot necessarily be considered as a
typical characteristic of State interference. As far as the State interference in transport
costs is concerned, this was taken into account by using the transport rates applicable
in  the  analogue  country.  Concerning  energy  and  electricity  costs,  no  evidence  was
found that these costs were significantly distorted by State interference and that they
did not substantially reflect market value. Furthermore, compared with natural gas, the
cost of energy and electricity is not a major input of urea.

Individual treatment

(35)

The Community industry objected to the decision to grant individual treatment to one
of the Ukrainian exporting producers arguing that the shareholding of the State in the
company would allow significant State interference.

(36) However,  no  new  information  or  evidence  was  submitted  by  the  complainant
Community  industry  showing  that  the  alleged  State  interference  would  permit
circumvention  of  the  measures  imposed  and  the  claim  had  thus  to  be  rejected.  The
findings of the provisional Regulation (recital (132)) are consequently confirmed.

Sales under tolling agreements

(37) As described in recitals (133) to (135) of the provisional Regulation three companies
in the Ukraine were involved in tolling agreements. It is recalled that, under Ukrainian
law, the provider of the raw materials remains the owner of the finished product, the
company doing the transformation does not acquire property on the goods. 

(38)

The investigation revealed that one  of the  companies  which was  granted MES could
not be considered,  on its own,  an exporting producer of the product  concerned.  This
company  had  established  a  long-term  business  relationship  with  another  company

8

based  in  a  third  country.  According  to  this  relationship,  the  latter  company  was
virtually  the  sole  supplier  under  tolling  agreements  (and  owner  throughout  the
production  process)  of  the  main  raw  material.  This  company  was  also  actively
involved  on  the  export  sales  of  the  product  concerned.  These  facts  clearly  indicated
that  the  relationship  between  these  companies  went  beyond  the  usual  buyer-seller
relationship.

(39)

In  the  absence  of  any  co-operation  from  the  associated  gas  supplier,  neither  the  full
cost  of  manufacturing  nor  the  price  paid  or  payable  on  export  sales  could  be
established, let alone verified. It should also be noted that although certain information
on export prices to the first independent buyer was available, this information was not
verifiable  and  could  therefore  not  be  used  to  establish  a  dumping  margin.  Since
without the co-operation of the associated supplier (and legal owner of both the main
raw material and the finished product), neither the normal value nor the export price of
the  Ukrainian  company  concerned  could  be  reliably  established.  Therefore,  an
individual dumping margin could not be established for this company.

(40) Another  Ukrainian  company,  which  was  neither  granted  MES  nor  individual
treatment, realised all its export sales under tolling agreements. In the absence of any
co-operation of  its gas supplier,  and  in  the  absence  of  verifiable  export  prices  to  the
first independent buyer, the prices of these transactions were established as described
in  recital  66  below  in  the  purpose  of  the  assessment  of  the  country-wide  dumping
margin. 

(41)

(42)

Finally, a third company has done part of its domestic and export sales under tolling
agreements.  Likewise,  in  the  absence  of  co-operation  from  its  suppliers,  and  in  the
absence of verifiable prices to the first independent buyer, the Community Institutions
had  no  option  but  to  disregard  all  sales  made  under  such  tolling  agreements.  The
remaining domestic sales were still representative, as determined in recital (138) of the
provisional duty Regulation.

Two  further  Ukrainian  companies  which  had  also  sales  on  the  basis  of  tolling  and
whose  gas  suppliers  equally  refused  to  co-operate  argued  nevertheless  that  the  sales
data  submitted  was  accurate  and  reliable  and  that  they  had  provided  sufficient
evidence  allowing  these  transactions  to  be  taken  into  account  when  determining
normal value or export price. 

(43) During the verification visit it  was  established that neither the invoice prices nor  the
payments for urea were included in the accounting records of these companies. In the
absence  of  any  co-operation  by  the  suppliers  of  gas,  in  which  accounts  these  data
should  normally  be  registered,  or  of  any  evidence  of  the  actual  payments  for  these
transactions,  the  information  could  not  be  verified  and  could  not,  therefore,  be
accepted.

Normal value

(i) Analogue country

(44)

Three Ukrainian exporting producers  argued that their normal value should not  have
been  based  on  the  domestic  prices  and  costs  of  an  analogue  country,  but  that  the
normal value based on domestic sales of an Ukrainian exporting producer which was
granted MES should have been used instead.

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(45)

(46)

(47)

It is the Community institutions’ consistent practice, in line with Article 2(7)(b) of the
Basic  Regulation,  to  determine  normal  value  on  the  basis  of  paragraphs  1  to  6  of
Article  2  of  the  Basic  Regulation  only  for  those  producers  that  can  show  that  they
operate  in  line  with  market  economy conditions. For  all other producers  in the  same
country, normal value is determined on the basis of Article 2(7)(a), i.e. on the basis of
a  price  or  constructed  value  in  a  market  economy  third  country,  or  on  any  other
reasonable basis foreseen in Article 2(7)(a). No changes are therefore warranted in this
respect to the provisional findings.

The  Belarussian  exporting  producer,  three  Ukrainian  exporting  producers,  the
government of Belarus and the Ukraine as well as an importer association objected to
the  choice  of  the  USA  as  an  analogue  country  claiming  that  Lithuania  was  a  more
appropriate market economy third country.

These parties alleged that the USA was not an appropriate choice because of its high
gas  costs  which  would  lead  to  distorted  urea  prices,  its  different  level  of  economic
development  compared  to  Belarus  and  the  Ukraine,  and  differences  in  market  size.
The fact that only one producer in the USA co-operated was also seen as an argument
not  to  use  USA  as  a  market  economy  third  country.  It  was  further  argued  that
Lithuania was the most appropriate analogue country. It was claimed that the volume
of  urea  produced  in  Lithuania  was  representative  as  compared  to  the  volume  of
exports of urea from the Ukraine and Belarus to the Community during the IP. It was
moreover  claimed  that  Lithuania  would  be  an  open,  competitive  market  where  no
import  duties  exist,  with  a  similar  access  to  natural  gas,  and  a  similar  production
process  as  in  Belarus  and  the Ukraine. The  fact  that  there  was  only  one  producer  of
urea in Lithuania was also considered irrelevant by the parties, as Lithuania and other
countries  with  one  producer  of  the  product  concerned  have  already  been  used  in
previous investigations of products belonging to the same category.

(48)

The  Community  institutions  have  examined  all  the  above  arguments  in  detail  and
came to the following conclusions:

(49) While on the USA market more than ten producers of urea are operating compared to
at least five producers in Ukraine, there is only one producer in Lithuania. Despite the
fact that anti-dumping duties exist in the USA on imports of urea from former Soviet
Union  countries,  there  were  substantial  imports  (more  than  1  million  tons)  of  urea
from  a  number  of  other  third  countries.  Although  the  further  investigation  revealed
that there are no import duties applicable in Lithuania to imports of urea, those imports
remain nevertheless at a very low level. The USA has a vast urea market (more than
10  million  tons  per  year),  whereas  the  Lithuanian  urea  market  is  practically  non-
existing.  Thus,  sales  of  urea  during  the  investigation  period  (‘IP’)  on  the  Lithuanian
market  were  minimal  and,  according  to  the  information  provided  by  the  Lithuanian
producer, not made in the ordinary course of trade. It has thus been concluded that the
US-market  for  urea  is  highly  competitive,  in  contrast  with  the  Lithuanian  market.
Finally,  and  contrary  to  Lithuania,  domestic  sales  in  USA  are  representative  when
compared to Belarus and Ukrainian exports to the Community.

(50)

The fact that only one US producer co-operated in this investigation  does not render
the above conclusions invalid. In fact, the prices of this producer, which were used to
establish normal value are subject to the above-described competition. The quantities
sold  by  this  producer  alone  were  even  representative  when  compared  to  the  total
quantities exported from Belarus and Ukraine to the Community.

10

(51) Regarding the similarity  in  access  to natural  gas, the main  raw  material  used  for  the
production of urea, an analysis of the supplies to the urea producers was also made. It
was  confirmed  that  while  the  American  producer  had  natural  gas  supplied  by  more
than one supplier,  as it was  the  case  in Ukraine, the  Lithuanian  producer  had  only  a
single  supplier  and  no  possible  alternative  suppliers.  In  addition,  similar  to  Ukraine,
the USA is both a producer and an importer of natural gas, while Lithuania has no own
natural gas resources.

(52)

(53)

(54)

The Commission has also compared production processes in the USA and Belarus and
the Ukraine and concluded that the technology used by the American producer was at
least as efficient as the one used by the Belarus and Ukrainian producers.

It was also argued that Lithuania should be used as the analogue country since it was
subject to the same investigation. 

The Commission notes that Article 2(7) of the Basic Regulation stipulates that, where
appropriate, a market economy country which is subject to the same investigation shall
be used. However, for the reasons outlined above in recitals 49 to 51, Lithuania could
not be considered as an appropriate analogue country in this investigation.

(55) As  already  stated  in  recital  (107)  of  the  provisional  Regulation,  an  adjustment  was
made to the high natural gas cost during the IP in the USA. The high natural gas cost
was the result of a market situation specific to the USA during the IP. This adjustment
brought  the  gas  cost  down  to  a  level  comparable  to  the  one  of  other  companies  co-
operating in this same proceeding.

(56)

(57)

(58)

The  Community  industry  supported  the  choice  of  the  USA  as  an  analogue  country.
However, it claimed that gas prices in the USA experienced only mild increases and
that therefore no adjustment should have been made in this regard. While it is correct
that the sharpest increase in gas prices took place only in the second half of the  year
2000,  i.e.  after  the  IP,  it  was  found  that  during  the  second  half  of  the  IP  there  was
already  an  unusual  and  specific  increase  in  the  cost  of  natural  gas.  The  adjustment
made was therefore considered justified. 

For  all  the  above  reasons,  it  is  concluded  that  the  USA  is  an  appropriate  analogue
market  economy  country  and  was  selected  in  a  not  unreasonable  manner.  A  normal
value based  on  the  domestic  sales  in  the  USA  made  in  the  ordinary  course  of  trade,
which includes a reasonable and not excessive profit margin, is therefore fully in line
with the requirements of Article 2(7)(a) of the Basic Regulation.

(ii) Normal value for companies granted MES

The Ukrainian company, which had almost all its sales made under tolling agreements,
argued  that  its  domestic  sales  should  be  used  as  a  basis  for  the  determination  of  its
normal  value.  As  alternatives,  the  company  proposed  the  Commission  to  use  the
normal  value  of  an  Ukrainian  exporting  producer  to  which  MES  was  granted  or  to
construct normal value on the basis of the company’s own data.

(59) As  a  consequence  of  non-co-operation  by  the  associated  supplier  of  gas,  it  was
concluded  that  this  Ukrainian  company  could  not  be  qualified,  on  its  own,  as  an
exporting  producer  of  urea  (see  details  in  recitals  (38)  and  (39)).  Consequently,  no
normal value was established.

11

(60) As  announced  in  recital  (138)  of  the  provisional  duty  Regulation,  it  was  further
examined whether adjustments to other cost factors, and in particular to  depreciation
incurred by the Ukrainian exporting producer for which normal value was based on its
own data, were necessary.

(61) A  comparison  of  the  depreciation  cost  included  in  the  cost  of  production  of  the
different  production  facilities  of  the  co-operating  producer  in  the  analogue  country
with the depreciation incurred by the Ukrainian producer showed  certain differences.
However, these differences could have been caused by numerous factors and were in
any  event  not  such  as  to  warrant  an  adjustment  to  the  Ukrainian  producer’s  cost.
Moreover,  as  the  normal  value  for  this  Ukrainian  producer  was  based  on  domestic
sales, any change to the cost would have a negligible impact, if any. No adjustments
were therefore made.

Export price

(62)

(63)

Two companies in the Ukraine, whose export sales were made on the basis of tolling
agreements and therefore excluded from the dumping calculations, submitted that their
export  price  should  be  constructed  on  the  basis  of  the  transformation  fee  charged  to
their  export  customers  plus  the  gas  cost  paid  by  themselves  or  another  exporting
producer in Ukraine, plus a reasonable amount of profit.

For  one  of  the  companies,  as  a  consequence  of  non-co-operation  of  the  associated
supplier  of  gas,  not  only  the  prices  of  its  exports  sales  were  not  verifiable,  but  this
company  could  not  be  qualified,  on  its  own,  as  an  exporting  producer  of  urea  (see
details  in  recitals  (38)  and  (39)).  Consequently,  no  individual  dumping  margin  has
been established for it.

(64) Regarding  the  other  company,  the  methodology  proposed  is  not  in  line  with  Article
2(9) of the Basic Regulation. The purpose of this Article is not to provide alternative
methods  to  establish  export  prices  in  cases  of  non  co-operation,  but  instead  to  take
account  of  the  participation  in  the  export  sales,  of  an  importer  in  the  Community
related  or  associated  with  the  exporting  producer.  The  construction  proposed  by  the
Ukrainian  companies,  contrary  to  what  is  established  on  Article  2(9)  of  the  Basic
Regulation, is not based on any price of sale to an independent party. Instead it uses as
a starting point a cost of manufacture (a method used to construct normal values, not
exporting prices). The claim was therefore rejected.

(65) A  third  Ukrainian  company,  which  also  had  all  its  export  sales  made  under  tolling
agreements, argued that rather than taking the lowest export prices, the average export
price of other Ukrainian exporting producers should have been used. 

(66) However,  there  was  no  reason  to  believe  that  that  the  average  export  price  of  other
Ukrainian  exporting  producers  was  more  accurate.  It  is  the  Community  Institutions’
practice, in cases of non-co-operation to use the weighted average export price of the
transactions with the lowest export prices, representing at the same time a considerable
quantity of the export quantities with verifiable prices.

12

Comparison

(67)

(68)

Two Ukrainian companies and one Belarussian company claimed that the Commission
should  provide  them  with  basic  information  to  allow  them  to  claim  natural
comparative advantages. 

Since  only  one  US  company  co-operated  in  the  proceeding,  no  specific  evidence
regarding  production  and  sales’  details  of  this  company  could  be  disclosed  without
breaching  the  rules  on  confidentiality.  Other  basic  information  (geographic  location,
access to raw materials, etc.) is publicly available.  The  Community  Institutions  have
analysed  the  available  information  and  have  made,  on  their  own  initiative,  the
necessary adjustments. It is re-called that an unusually high natural gas cost during the
IP  in  the  USA  was  identified  and  consequently,  an  adjustment  made  to  the  gas  cost
used  for  the  co-operating  USA  company  brought  the  gas  cost  down  to  a  level
comparable to the one of other companies co-operating in this same proceeding.

(69)

Three Ukrainian companies and the Belarussian company disagreed with the fact that
the Commission made an adjustment for inland transport to the export price based on
railway tariffs in the analogue country. It was argued that Ukrainian tariffs should be
used, or alternatively, Lithuanian tariffs. 

(70) Railway  tariffs  in  Ukraine  and  Belarus,  countries  which  are  not  yet  operating  under
market economy conditions, are set by the State and cannot, therefore, be considered
to  reflect  normal  market  prices.  It  is  a  long  established  practice  of  the  Community
Institutions  to  base  adjustments  for  this  type  of  inland  transport  for  countries  under
Article 2(7) of the Basic Regulation, on verified data from the analogue country, when
available.  It  was  also  specifically  mentioned  when  granting  MES  to  some  of  the
Ukrainian  companies  involved  that  certain  cost  factors  could  be  corrected  to  bring
them  in  line  with  normal  market  value.  No  change  to  the  provisional  findings  is
therefore warranted.

(71)

(72)

(73)

It  was  also  claimed  that  lower  tariffs  should  be  applied  as  Ukrainian  exporting
producers  used  own  railway  wagons  with  large  consignments,  including  return  of
empty wagons. 

Information from the producer in the analogue country revealed that an adjustment for
the  use  of  own  wagons  was  warranted.  The  calculations  were  therefore  revised
accordingly.

It  was  argued  by  the  Ukranian  and  Belarussian  companies  that  the  adjustment  made
for physical  differences  between  “granular”  urea  sold  on  the  domestic  market  of  the
analogue  country  and  “prilled”  urea  exported  by  these  countries  should  have  been
based on price differences on the European market. 

(74) However, since the aim is to determine a normal value for prilled urea on the analogue
country  market,  the  adjustment  must  be  based  on  a  price  difference  on  that  same
market.  The  adjustment  made  has  thus  been  based  on  price  differences  on  the  US
market. To use the Community market does not appear to be appropriate because the
price  difference  on  that  market  will  in  all  likelihood  be  influenced  by  dumping
practices. Consequently, the claim was rejected.

13

(75)

(76)

(77)

(78)

Two Ukrainian companies and the company in Belarus also claimed an adjustment for
level of trade as they were allegedly selling only to traders. 

The exporting producers in the Ukraine and Belarus exported the product concerned to
traders.  The  co-operating  producer  in  the  analogue  country  sold  the  product  also  to
traders.  Part  of  the  domestic  sales  of  the  analogue  country  producer  were  made  to
blenders. A thorough analyses of functions and prices revealed that the claim was not
warranted.

3. Dumping margin for companies investigated

Application of Article 18 of the Basic Regulation

Subsequently  to  the  imposition  of  provisional  duties,  the  Commission  further
examined whether the freight costs reported by the Lithuanian exporting producer, but
paid  by  the  importers,  were  accurate.  It  was  found  that  these  costs  were  overstated
when  compared  to  information  collected  from  importers  and  with  publicly  available
quotations  for  the  same  routes.  The  amounts  for  freight  costs  have  been  revised
accordingly and the actual costs have been used.

Following  the  comments  of  the  Estonian  exporting  producer  concerning  the
inappropriateness  of  an  adjustment  of  the  CIF  value  of  the  unreported  sales  used  to
express the dumping margin for these sales that was made at the provisional stage, the
Commission analysed the issue in more detail and decided to revise the methodology
used. The adjustment made at the provisional stage has been withdrawn. However, in
the absence of reliable information provided by the company, the Commission decided
to  base  its  findings  on  the  information  provided  by  Eurostat,  since  it  constitutes  the
most reliable data available. 

(79)

The Commission provisionally made an adjustment to the CIF value of the Belarussian
exporting producer used to  calculate  the dumping margin.  Since this  adjustment was
made erroneously, the adjustment was withdrawn. 

Dumping margins

(80)

The definitive dumping margins, expressed as a percentage of the CIF import price at
Community border, are:

Belarus

All companies:

Bulgaria

Chimco AD:

Others:

Croatia

Petrokemija d.d.:

Others:

67.3%

90.3%

90.3%

72.9%

72.9%

14

Estonia

JSC Nitrofert

Others:

Libya

National Oil Corporation:

Others:

Lithuania

Joint Stock Company Achema, Jonava:

Others:

Romania

S.C. Amonil S.A., Slobozia

Petrom S.A. Sucursala Doljchim Craiova, Craiova

Sofert S.A., Bacau

Others:

Ukraine

Cherkassy Azot, Cherkassy

DniproAzot, Dniprodzerzhinsk

Others:

E. INJURY

37.4%

37.4%

48.8%

48.8%

10.0%

10.0%

20.1%

40.7%

25.2%

40.7%

21.1%

66.3%

82.1%

1. Definition of the Community industry

(81)

Several interested parties repeated their claim that those Community producers which
purchased  and  imported  urea  from  countries  covered  by  this  proceeding,  should  be
excluded from the definition of the Community industry

(82) As outlined at recital (156) of the provisional Regulation, these purchases were mainly
small  in  volume  and  were  made  to  cover  production  shortfalls  due  to  maintenance
works.  The  one  company  that  did  make  more  substantial  purchases,  equal  to
approximately 20% of its own production in the IP, did so in order to supplement its
product range. The investigation showed that this company is primarily a producer of
urea, and not an importer, and that there are thus no good reasons for it to be excluded
from the definition of the Community industry. In any case such exclusion would have
no significant impact on the findings of the case nor on the level of duties imposed.

(83) Accordingly the findings in recital (157) of the provisional Regulation are confirmed.

15

2. Community consumption

(84)

In  the  absence  of  any  new  information,  the  findings  concerning  Community
consumption as outlined at recitals (158) and (159) of the provisional Regulation are
confirmed.

3. Imports from the countries concerned

Cumulative assessment of the effects of the imports concerned

(85)

It was claimed that imports of urea  originating in Romania  should  not  be  cumulated
with  imports  from  the  other  countries  covered  by  this  proceeding.  The  claim  was
based  on  the  grounds  that  the  import  volumes  and  the  market  shares  developed
differently over the period considered.

(86) At recital (162) of the provisional Regulation, it was determined that:

– 

– 

– 

Imports from all  the countries  concerned were substantial  and well above the
levels set out in Article 5(7) of the basic Regulation.

The  dumping  margins  found  were  all  above  the  de  minimis  level,  and  all
exporting producers undercut the sales prices of the Community industry.

The  prices  of  both  imported  and  Community  produced  urea  fell  significantly
over the period considered.

(87)

The volume of urea imports from Romania followed the trend for the price of urea on
the  Community  market  i.e.  there  was  a  certain  relationship  between  prices  and  the
volume  of  imports  from  Romania  over  the  period  considered.  In  1999  when  prices
were at their lowest, there were almost no imports from Romania. This is evidence of
price  transparency  in  the  Community  urea  market.  It  also  shows  that  Romanian
exporters will withdraw from a market when prices fall too far. Nevertheless, with the
partial  recovery  in  prices  between  1999  and  the  IP  (recital  (164)  of  the  provisional
Regulation),  Romanian  imports  increased  substantially  so  that  they  held  2.3%  of
market  share  during  the  IP.  Of  the  countries  concerned,  Romania  was  the  fourth
largest exporter to the Community during the IP. 

(88) Nor was this import trend specific to Romania. Imports from several of the countries
concerned also followed a remarkably similar pattern of falling imports between 1996
and  1999  followed  by  a  significant  return  to  the  Community  market  during  the  IP.
This  is  against  a  background  of  total  import  volumes  from  the  countries  concerned
rising  year on  year  over  the  period considered.  The  only  change  was  in  the  share  of
those  imports  between  the  countries  concerned  in  line  with  prices.  This  is  further
evidence  of  competition  between  imported  products  and  is  not  a  reason  for  de-
cumulating the imports from Romania, or indeed any of the other countries concerned.

(89)

For  all  of  the  reasons  outlined  above,  it  is  concluded  that  the  criteria  as  set  out  in
Article 3 (4) of the basic Regulation have been met. The findings at recital (162) of the
provisional Regulation are, therefore, confirmed.

16

Volume, market shares, and prices of the imports concerned

(90)

In the absence of any new information on the volume and prices of imports from the
countries concerned, the provisional findings are confirmed.

Undercutting

(91)

For  the  provisional  determinations,  undercutting  was  calculated  by  comparing  the
exporters’ Community frontier, ex quay, customs duty paid price level (DEQ) with the
Community  producers’  verified  ex-works  prices.  The  comparison  was  made  at  a
prilled to prilled, granular to granular, bulk to bulk, and bagged to bagged level.

(92) A  number  of  parties,  including  several  of  the  exporting  producers,  claimed  that  the
Community producers’ prices for the undercutting comparison should be the weighted
average  price  at  the  Community  industry  level  and  not  the  price  at  the  individual
producer level. It is claimed that such a methodology serves to artificially inflate the
margin by zeroing at the Community producer level.

(93)

(94)

(95)

(96)

(97)

It should first be noted that the undercutting or price comparison exercise is an injury
indicator which, under Article 3(3) of the basic Regulation, aims to examine “whether
there has been significant price undercutting by the dumped imports as compared with
the price of a  like  product of the Community  industry, or whether the effect of such
imports is otherwise to depress prices to a significant degree”.

It is true that not all imports from the countries concerned undercut the prices of each
Community  producer.  However,  a  significant  volume  of  export  sales  were  made  at
prices  below  those  of  the  Community  industry.  It  is  also  noted  that  the  Community
urea market is both highly transparent and sensitive to price changes.

Following  further  analysis  it  was  found  that,  for  the  countries  concerned,  the
proportion of imports, by company, which undercut the Community industry’s prices,
varied from 0% to 56%, with an overall average for all imports of 46%. The level of
the undercutting ranged as high as 17%. For this analysis, no zeroing was used. Due to
problems  with  co-operation  from  the  exporting  producer  in  Belarus  (recital  (113)  of
the provisional Regulation) and Estonia (recital (58) of the provisional Regulation), it
was  not  possible  to  carry  out  this  price  comparison  for  these  companies.  However,
there are no reasons to suggest that their results would have been any different.

Furthermore, it should  be  noted  that  the  Community  industry  recorded  losses  during
the  IP (recital  (175)  of the  provisional Regulation),  i.e. the prices  of  the  Community
industry were depressed. Also for the one company with no undercutting, underselling
was still found

It  is,  therefore,  definitively  determined  that  there  was  both  significant  price
undercutting  by  the  exporting  producers  in  the  countries  concerned,  as  well  as  a
depression of prices on the Community market during the IP. 

(98) A number of claims were made concerning the injury elimination calculations. These
are addressed in detail in recitals (114) to (116) and (121) to (123) below. However,
where  adjustments  were  granted,  it  is  confirmed  that  these  were  also  taken  into
account for the undercutting exercise.

17

4. Situation of the Community industry

(99)

Following  further  verification  of  two  Community  producers,  some  of  the  injury
indicators  changed  in  absolute  terms.  However,  these  changes  were  not  sufficient  to
materially  affect  the  trends  of  the  injury  indicators  over  the  period  considered  or  to
alter  the  provisional  conclusions.  Based  on  the  above,  the  provisional  findings  of
material injury suffered by the Community industry are confirmed.

F. CAUSATION

(100) A  number  of  interested  parties  re-iterated  their  claim  that  the  injury  suffered  by  the
Community industry was not caused by dumped imports but rather by the oversupply
of urea on the world market. This is linked to the claim made by some of the parties
that the injury suffered by the Community industry was a result of their fall in export
sales, which in turn affected their sales on the Community market.

(101)

(102)

In  this  respect,  it  should  be  noted  that  the  assessment  of  the  situation  of  the
Community industry was based on data relating to sales of the product concerned on
the  Community  market.  Therefore,  the  potential  negative  effects  of  reduced  export
sales are excluded in the above injury analysis.

In  addition,  over  the  period  considered,  Community  industry  export  sales  fell  by
337,000  tonnes,  whilst  its  sales  on  the  Community  market  increased  by  172,000
tonnes. Therefore, faced with difficult export conditions, the Community industry was
able to divert half of its lost export sales onto the Community market.

(103) At  the  same  time,  Community  consumption  increased  by  1.25  million  tonnes,  low
priced  dumped  imports increased by 867,000  tonnes  (recital  (163)  of  the  provisional
Regulation),  and  the  Community  industry  lost  10.3%  of  the  Community  market
(recital (173) of the provisional Regulation). Rather than being the cause, the inability
of the Community industry to take advantage of an expanding domestic market when
export sales fell, is evidence of the existence of injury caused by the dumped imports.

(104) Accordingly, oversupply and loss of export sales could in fact only have had an effect
on the Community industry (in terms of a limited loss of economies of scale) because
the  dumped  imports  prevented  it  from  taking  full  advantage  of  an  expanding
Community market. Therefore, it is concluded that the effect of the fall in export sales
by  the  Community  industry,  and  the  alleged  oversupply,  when  they  are  examined
separately, was not sufficient to break the causal link between the effect of the dumped
imports and the material injury suffered by the Community industry. The conclusions
of recitals (197) and (198) of the provisional Regulation are confirmed.

G. COMMUNITY INTEREST

1. Importers/traders

(105) Following publication of the provisional Regulation, no comments were received from
any of the co-operating importers. However, one association of importers maintained
that the imposition of anti-dumping measures was against the interest of importers of
urea and that for them a flourishing agricultural sector is important.

(106) As stated at recital (206) of the provisional Regulation, there will be a continuing need
for  imports.  Even  were  the  duties  to  be  passed  on  in  full  this  would  result  in  an

18

increase of no more than 0.6% in farmers’ costs at worst. Whilst such a rise may result
in some changes in the way that farmers source their urea, there is no evidence to call
into question the conclusions set out in recital (206) of the provisional Regulation.

2. Users

Farmers

(107) Following  publication  of  the  provisional  Regulation,  comments  were  received  from
farmers’  organisations  in  Austria,  Italy,  Spain  and  the  U.K.  None  of  these  parties
challenged the provisional conclusion that the duties would lead to a 0.6%, worst case
scenario,  increase  in  farmers’  costs.  They  did  however,  object  to  the  imposition  of
measures and to the conclusion that prise increases would not be passed on in full.

(108) Following a verification at the premises of a farmers’ co-operative, the conclusion of
the  cost  implication  of  the  proposed  measures  is  confirmed.  That  the  impact  of  the
measures will not be passed on in full is based  on experience from  many  other anti-
dumping proceedings. There is no evidence to suggest that this would not be case in
this proceeding.

(109) Whilst  the  difficult  situation  faced  by  farmers  is  re-affirmed,  it  is  not  possible  to
conclude  that  the  impact  of  the  duties  would  be  such  as  to  make  the  imposition  of
measures against the interest of the Community.

Industrial users

(110) No  written  comments  were  received  direct  from  any  of  the  co-operating  industrial
users  of  urea.  This  suggests  that  the  measures  would  not  have  such  an  important
impact on these users of urea.

(111) One  industrial  user,  who  also  imports  and  sells  urea,  submitted  comments  via  an
importers  association.  This  company  suggests  that  the  imposition  of  measures  may
force it to close its plant with the loss of up to 380 jobs. However, as this claim was
not  made  directly  by  the  company,  and  as  it  is  not  supported  by  any  evidence,  the
claim is rejected.

3. Conclusion on Community interest

(112)

In the absence of any new information regarding the Community interest aspects, the
conclusions of recital (219) of the provisional Regulation, are confirmed.

H. DEFINITIVE ANTI-DUMPING MEASURES

1. Injury elimination level

(113) For  the  provisional  determinations,  underselling  was  calculated  by  comparing  the
exporters’ Community frontier, ex quay, customs duty paid price level (DEQ) with the
Community producers’ verified ex-works target prices. The comparison was made by
company  on  a  prilled  to  prilled,  granular  to  granular,  bulk  to  bulk,  and  bagged  to
bagged level.

19

(114) Many  exporting  producers  claimed  that  the  adjustment  made  for  unloading  costs  to
arrive  at  the  DEQ  price  was  insufficient.  It  was  also  claimed  that  an  importers’
(mainly traders) margin should be included, in line with other recent fertiliser cases.

(115) Further  evidence  of  actual  unloading  costs  incurred  has  been  obtained  from  several
sources, including the exporting producers, the Community industry, and independent
importers. On the basis of this information, the allowance for unloading costs has been
adjusted accordingly.

(116) The question of  granting  an  adjustment  for  the  importers'  margin  was  considered  on
the merits of this particular  investigation.  It was  found  that exporting producers sold
urea on the Community market via a number of channels, including directly to the end
user.  No  evidence  was  provided  that  prices  varied  according  to  the  channel  used.
Rather, it was found that in general, the selling prices did not depend upon the type of
the customer. Nor were any significant differences found between  the sales channels
used  by  the  Community  industry  and  those  used  by  the  exporting  producers.
Accordingly the request for an adjustment for an importers' margin was rejected.

(117) A number of parties, including  the majority of the exporting producers,  claimed that
the  Community  producers’  prices  for  the  underselling  calculation  should  be  the
weighted  average  price  at  the  Community  industry  level  and  not  the  price  at  the
individual producer level. It was claimed that such a methodology served to artificially
inflate  the  margin  by  eliminating  any  negative  underselling  at  the  Community
producer  level.  In  addition  it  was  claimed  that  basing  anti-dumping  duties  on  a
calculation methodology which results in zeroing, contravenes a recent WTO ruling.3

(118)

It should be noted that the underselling calculation aims to examine the actual extent
of injury suffered by the Community industry caused by dumped imports. To show a
true  picture  any  price  comparison  should  reflect  economic  reality.  The  investigation
showed  that  competition  on  the  Community  market  takes  place  between  each
individual  exporting  producer  and  each  individual  producer  which  forms  part  of  the
Community  industry.  In  this  respect  it  is  noted,  inter  alia,  that  there  are  significant
price spreads and important differences in the location of the Community  producers.
Thus,  the  extent  of  any  injurious  dumping  caused  by  an  exporting  producer  to  the
Community industry should be assessed on the actual market situation and on the basis
of specific data verified for each company.

(119) Comparing  prices  company  by  company  results  in  a  precise  evaluation  of  the  full
impact  of  any  injurious  dumping  suffered  by  the  Community  industry,  and  does  not
artificially inflate the level of underselling in the current case. Accordingly the claim is
rejected.

(120) The Community industry claimed that some of the urea imported into the Community
was  in  fact  a  “fat”  prill,  which  should  be  treated  as  a  separate  type  of  urea.  It  was
further claimed that, for the underselling calculation, this type should be compared to
the price of Community produced “fat” prill.

(121)

It  was  found  that  large  diameter  or  “fat”  prills  were  indeed  produced  by  the
Community  industry  as  well  as  being  exported  to  the  Community  from  some  of  the

3 

European Communities - Anti-Dumping Duties on Imports of Cotton-Type Bed Linen from India –
AB-2000-13 - Report of the Appellate Body 01.03.2001.

20

                                                
countries  concerned.  However the only  difference  to  standard  prills  is  in  their  larger
diameter.  Nor  is  there  is  any  evidence  to  suggest  that  the  cost  of  production  is  any
higher  or  that  “fat”  prills  were  sold  at  a  premium  during  the  IP.  Accordingly,  it  is
concluded that there are no reasons why “fat” prills should be considered as a separate
product type.

(122) Some exporting producers  repeated their  claim for an  adjustment  for  quality  of  their
product.  However,  no  supporting  evidence  was  provided.  Nor  was  any  market
perception  of  quality  problems  with  Romanian  urea  found.  The  claim  is  therefore
rejected.

(123)

(124)

It should be noted that for calculating the non-injurious price at the provisional stage, a
profit margin of 8% on cost was used and not 8% on turnover as stated at recital (222)
of  the  provisional  Regulation.  Certain  co-operating  parties  argued  that  the  profit
margin should be limited to 5%, as was the case in previous anti-dumping proceedings
concerning  nitrate  fertilisers  as  well  as  in  the  proceeding  concerning  urea  from
Russia4. For its part, the Community industry re-stated its claim that a profit margin of
15% return on capital employed (ROCE) would be more appropriate.

It is confirmed that the determination of the relevant profit margin in this proceeding is
based  on  an  assessment  of  the  profit  margin  that  the  Community  industry  could
reasonably have counted upon under normal conditions of competition, in the absence
of dumped imports. It is therefore based on an assessment of the facts in this case and
not  on  the  assessment  of  the  facts  in  other  proceedings  concerning  other  products
and/or other investigation periods.

(125) For  the  reasons  stated  at  recital  (223)  of  the  provisional  Regulation,  the  claim  that

profitability be based on ROCE is rejected.

(126) Given the above, and in the absence of any evidence that the determination of an 8%
profit margin is incorrect, the conclusions of recitals (221) to (227) of the provisional
Regulation are confirmed.

(127) Finally,  information  received  and  data  verified  following  publication  of  the
provisional  Regulation,  including  verified  information  from  two  further  Community
producers, was also incorporated into the calculations, where appropriate.

2. Level and form of the duties

(128)

In light of the foregoing, it is considered that, in accordance with  Article  9(4)  of the
Basic Regulation, definitive anti-dumping duties should be imposed at the level of the
injury margins or dumping margins found, on imports of urea originating in Belarus,
Bulgaria, Croatia, Estonia, Libya, Lithuania, Romania and the Ukraine, whichever are
the lower. 

(129) As regards the residual duty to be applied to the non co-operating exporting producers,
the residual duty was fixed on the basis of the highest duty rate established for the co-
operating exporters in each country.

4 

OJ L 127, 09.05.2001, p.11

21

                                                
(130) One  exporting  producer  claimed  that,  in  order  to  be  consistent  with  a  previous
proceeding, the duties should take the form of a minimum import price, as is the case
for urea from Russia.

(131) However, as stated at recital (231) of the provisional Regulation, in order 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, definitive duties should take the form of a specific amount per
tonne. The claim is, therefore, rejected.

(132) On the basis of the above, the definitive duty amounts are as follows:

COUNTRY

COMPANY

BASIS FOR

DEFINITIVE DUTY

AD DUTY (%)

(€ PER TONNE).

Belarus

Single country-wide margin

Bulgaria

Chimco AD

Others

Croatia

Petrokemija d.d.

Others

Estonia

JSC Nitrofert

Others

Libya

National Oil Corporation

Others

Lithuania

Joint Stock Company Achema

Others

Romania

S.C. Amonil S.A., Slobozia 

Petrom S.A. Sucursala Doljchim
Craiova, Craiova

Sofert S.A., Bacau

Others

Ukraine

Open  Joint  Stock  Company
Cherkassy Azot, Cherkassy

Joint 
Stock 
DniproAzot, Dniprodzerzinsk

Company

Others

22

8.0

24.2

24.2

9.4

9.4

11.4

11.4

12.5

12.5

10.0

10.0

6.7

5.7

7.6

7.6

18.7

9.2

19.5

7.81

21.43

21.43

9.01

9.01

11.45

11.45

11.55

11.55

10.05

10.05

7.20

6.18

8.01

8.01

16.27

8.85

16.84

(133) The  individual  company  anti-dumping  duty  rates  specified  in  this  Regulation  were
established on the basis of findings of the present investigation. Therefore, they reflect
the  situation  found  during  that  investigation  with  respect  to  these  companies.  These
duty rates (as opposed to the country-wide  duty  applicable to  “all other companies”)
are  thus  exclusively  applicable  to  imports  of  product  originating  in  the  country
concerned  and  produced  by  the  companies  and  thus  by  the  specific  legal  entities
mentioned.  Imported  product  produced  by  any  other  company  not  specifically
mentioned in the operative part of this Regulation with its name and address, including
entities  related  to  those  specifically  mentioned,  cannot  benefit  from  these  rates  and
shall be subject to the duty rate applicable to “all other companies”.

(134) Any claim requesting the application of these individual company anti-dumping duty
rates (e.g. following a change in the name of the entity or following the setting up of
new  production  or  sales  entities)  should  be  addressed  to  the  Commission5  forthwith
with  all  relevant  information,  in  particular  any  modification  in  the  company’s
activities  linked  to  production,  domestic  and  export  sales  associated  with  e.g.  that
name change or that change in the production and sales entities. The Commission, if
appropriate, will, after consultation of the Advisory Committee, amend the Regulation
accordingly by updating the list of companies benefiting from individual duty rates.

3. Collection of provisional duties

(135)

In view of the magnitude of the dumping margins found and in the light of the injury
caused to the Community industry, it is considered necessary that the amounts secured
by way of the provisional anti-dumping duty, imposed by the provisional Regulation,
should be definitively collected at the rate of the duty definitively imposed. Where the
definitive duties are higher than the provisional duties, only the amounts secured at the
level of the provisional duties should be definitively collected.

4. Undertakings

(136) Subsequent to the imposition of provisional measures, exporting producers in Belarus,
Croatia,  Libya,  Romania  and  the  Ukraine  offered  price  undertakings  in  accordance
with  Article  8(1)  of  the  Basic  Regulation.  The  exporting  producers  in  Estonia  and
Lithuania  renewed  their  undertaking  offers,  already  made  at  provisional  stage,  but
which  had  been  rejected  for  the  reasons  set  out  in  recital  (236)  and  (237)  of  the
provisional Regulation. 

(137)

It  is  recalled  that  the  Commission  had  already  accepted  an  undertaking  from  the
Bulgarian  exporting  producer  at  the  provisional  stage  of  this  proceeding  (see  recital
(236) of the provisional Regulation). As mentioned in recital (128), the incorporation
of  new  data  in  the  definitive  injury  margin  calculation  had  an  impact  on  the  injury
elimination level found. The minimum price of the undertaking was therefore adapted
accordingly. 

5 

European Commission
Directorate-General Trade
TERV 00/13
Rue de la Loi/Wetstraat 200
B-1049 Brussels

23

                                                
(138) Subsequent to the disclosure of the provisional findings, the complainant Community
industry  objected  to  the  Commission’s  decision  to  accept  an  undertaking  from  the
Bulgarian  exporting  producer.  In  this  respect,  it  was  argued  that  the  company
concerned  was  related  –or  had  close  technical  and  industrial  relations-  to  other
exporters  and/or  producers  of  nitrogen  fertilisers  including  urea,  located  in  Bulgaria,
Belarus and the Ukraine which would constitute a strong potential for  compensatory
arrangements.  Furthermore,  the  Community  industry  raised  concerns  regarding  the
ability of this exporting producer to fulfil the obligations of an undertaking. 

(139) On a more general basis, the Community industry claimed that undertakings, and thus
minimum prices, would be an inappropriate measure with regard to nitrogen fertilisers
including urea.

(140)

It should be noted that the Community industry could not support the allegations made
with regard to the exporting producer in Bulgaria by sufficient evidence. Furthermore,
the  investigation  of  the  Commission  did  not  confirm  these  allegations  and  they  had
therefore to be rejected. As far as the appropriateness of the undertaking is concerned
it  should  be  noted  that  such  assessment  should  primarily  focus  on  the  company
specific  situation.  Thus,  it  was  found  that  the  company  concerned  produces  and
exports only urea and that an effective monitoring of the undertaking is most likely in
this case.

(141)

In any case, in the event of suspected breach, breach or withdrawal of the undertaking
an anti-dumping duty may be imposed, pursuant to Article 8(9) and (10) of the Basic
Regulation.

(142) All other undertaking offers received were also analysed in detail. Two main obstacles
to the acceptability of these undertaking offers resulted from this examination:

(143) The  exporting  producers  concerned  in  Lithuania,  Romania,  Croatia,  Ukraine  and
Libya are producers of different types of fertilisers and/or other chemical products and
have  consistently  in  the  past  exported  these  products  to  common  customers  (mostly
traders)  in  the  Community.  This  practice  raises  a  serious  risk  of  cross-compensation
i.e.  that  any  undertaking  prices  would  be  formally  respected  but  that  prices  for
products  not  concerned would  be  lowered. All  this  would  render  the  commitment  to
respect  a  minimum  price  for  urea  easy  to  circumvent  and  extremely  difficult  to
monitor effectively. 

(144) Furthermore, certain producers (vg: Estonia, Ukraine, Belarus) claimed that they  had
no control over, or even knowledge of the destination and/or sales conditions of their
exports of urea, while it was clear from official statistics that the product was exported
to the Community in large quantities during the investigation period. It is recalled that
given that these companies did not  provide  sufficient  information in this respect, the
Commission  had  no  option  but  to  make  use  of  facts  available  in  accordance  with
Article  18  of  the  Basic  Regulation  to  establish  export  prices.  In  addition,  certain
exporters (Libya, Estonia) provided overall a deficient level of co-operation during the
investigation.  It  was  considered  that  these  facts  render  the  risk  of  accepting  an
undertaking  unreasonably  high  and  the  guarantees  to  assure  a  proper  monitoring
unsatisfactory. 

(145) For the reasons set out above, it was therefore concluded that none of the undertakings

offered subsequent to the disclosure of the definitive findings should be accepted. 

24

(146) The interested parties were informed accordingly and the reasons why the undertaking
offered  could  not  be  accepted  disclosed  in  detail  to  the  exporters  concerned.  The
Advisory Committee has been consulted.

HAS ADOPTED THIS REGULATION:

Article 1

1  A  definitive  anti-dumping  duty  is  hereby  imposed  on  imports  of  urea,  whether  or  not  in
aqueous solution, falling within CN codes 3102 10 10 and 3102 10 90 originating in Belarus,
Bulgaria, Croatia, Estonia, Libya, Lithuania, Romania and the Ukraine. 

2.  The  rate  of  the  definitive  anti-dumping  duty,  applicable,  before  duty,  to  the  net,  free-at-
Community frontier price of the product described in paragraph 1 above, shall be as follows:

Country of origin

Produced by

Definitive anti-
dumping duty

TARIC additional
code

(€ per ton)

Belarus

Bulgaria

Croatia

Estonia

Libya

Lithuania

Romania

Ukraine

All companies

All companies

All companies

All companies

All companies

 All companies

S.C.  Amonil 
Slobozia

S.A.,

Petrom  S.A.  Sucursala
Doljchim 
Craiova,
Craiova 

Sofert S.A., Bacau

All other companies

7.81

21.43

9.01

11.45

11.55

10.05

7.20

6.18

8.01

8.01

-

A999

-

-

-

-

A264

A265

A266

A999

Joint 

Open 
Company 
Azot, Cherkassy

Stock
Cherkassy

Joint  Stock  Company
DniproAzot,
Dniprodzerzhinsk

16.27

A268

8.85

A269

All other companies

16.84

A999

25

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  the  amount  of  anti-
dumping duty, calculated on the basis of paragraph 2 above, shall be reduced by a percentage
which corresponds to the apportioning of the price actually paid or payable.

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

Article 2

1. Imports shall be exempt from the anti-dumping duties imposed by Article 1 provided that
they  are  produced  and  directly  exported  (i.e.  shipped  and  invoiced)  to  the  first  independent
customer in the Community  acting as  an importer  by the company named below  which  has
offered undertakings accepted by the Commission, when such imports are in conformity with
paragraph 2.

Country 

Bulgaria

Company

TARIC additional code

Chimco  AD,  Shose  az
Mezdra, 3037 Vratza

A272

2.  (a)  When  the  declaration  for  release  for  free  circulation  pursuant  to  an  undertaking  is
presented,  exemption  from  the  duty  shall  be  conditional  upon  presentation  of  a  valid
commercial  invoice,  issued  by  the  company  listed  in  paragraph  1,  to  the  Member  States
customs authorities. 

(b) The undertaking invoice shall conform with the requirements for such invoices set out in
the undertaking accepted by the Commission, the essential elements of which are listed in the
Annex to this Regulation6. 

(c) Exemption from the duty shall further be conditional on the  goods presented to customs
corresponding precisely to the description on the commercial invoice.

3. Imports accompanied by such an undertaking invoice shall be declared under  the TARIC
additional code provided in paragraph 1:

Article 3

The  amounts  secured  by  way  of  the  provisional  anti-  dumping  duty  imposed  pursuant  to
Regulation  (EC)  No  1497/2001  shall  be  definitively  collected  at  the  rate  of  the  duties
definitively imposed on imports of urea, whether or not in aqueous solution, falling within CN
codes 3102 10 10 and 3102 10 90  originating in  Belarus,  Bulgaria, Croatia,  Estonia,  Libya,
Lithuania, Romania and the Ukraine.

The amounts secured in excess of the definitive rate of anti-dumping duties shall be released. 

6 

See separate document

26

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

Article 4

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

Done at Brussels, 

For the Council

President

27

ANNEX

The following elements shall be indicated in the commercial invoice accompanying the
Company’s sales of urea to the Community which are subject to the Undertaking.

The  heading  “COMMERCIAL  INVOICE  ACCOMPANYING  GOODS  SUBJECT

1.
TO AN UNDERTAKING”

2.

3.

4.

The name of the company mentioned in Article 2(1). issuing the commercial invoice

The commercial invoice number 

The date of issue of the commercial invoice

The TARIC additional code under which the goods on the invoice are to be customs

5.
cleared at the Community frontier 

6.

The exact description of the goods, including:

- The Product Code Number (PCN)

- The description of the goods corresponding to the PCN (i.e.  "PCN 1 urea in bulk",

"PCN 2urea, bagged")

- the company product code number (CPC) (if applicable)

- CN-code

- quantity (to be given in tonnes)

7.

The description of the terms of sale, including:

- price per tonne

- the applicable payment terms

- the applicable delivery terms

- total discounts and rebates

Name of the company acting as an importer to which the invoice is issued directly by

8.
the company

The name of the official of the company that has issued the undertaking invoice and

9.
the following signed declaration:

“I, the undersigned, certify that the sale for direct export by [company name] to the
European Community of the goods covered by this invoice is being made within the
scope  and  under  the  terms  of  the  Undertaking  offered  by  [company  name],  and
accepted by the European Commission through  [Regulation (EC) No 1497/2001].  I
declare that the information provided in this invoice is complete and correct.”

28