Proposal for a Council Regulation amending Regulation (EC) No 900/2001 imposing definitive anti-dumping duties on imports of urea and ammonium nitrate solutions originating in Poland
Date: 2002-09-26
Institutions: European Commission
Subjects: Poland, anti-dumping duty, anti-dumping legislation, chemical fertiliser, import, originating product

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Official Journal of the European Communities

28.1.2003

Proposal for a Council Regulation amending Regulation (EC) No 900/2001 imposing definitive
anti-dumping duties on imports of urea and ammonium nitrate solutions originating in Poland

(2003/C 20 E/33)

COM(2002) 531 final

(Submitted by the Commission on 26 September 2002)

EXPLANATORY MEMORANDUM

By Regulation (EC) No 900/2001, the Council imposed a definitive anti-dumping duty on imports of urea
and ammonium nitrate solutions originating in Poland. These measures in the form of a specific duty per
tonne were imposed following a review investigation pursuant to Articles 11(2) and 11(3) of Council
Regulation (EC) No 384/96 concerning the original measures imposed by Council Regulation (EC)
No 3319/94 which were based on a minimum import price.

The Commission services have now carried out an interim review investigation, limited in scope to the
examination of dumping, pursuant to Article 11(3) of Council Regulation (EC) No 384/96 following a
request lodged by the Polish exporter Zaklady Azotowe ‘Pulawy’ SA (ZAP) which alleged that circum-
stances had changed so that the continued imposition of the anti-dumping measures on it was no longer
necessary to counteract dumping. The investigation was duly initiated in October 2001.

The investigation showed a lower dumping margin, 0,8 %, i.e. de minimis, than that established in the
original investigation and that the lower level of dumping was attributable to changes in circumstances
deemed to be of a lasting nature.

In the light of the foregoing, the Commission proposes that the Council adopt the attached proposal for a
Regulation amending Regulation (EC) No 900/2001 on imports of urea and ammonium nitrate solutions
originating in Poland.

THE COUNCIL OF THE EUROPEAN UNION,

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

Having regard to the Treaty establishing the European
Community,

Whereas:

A. EXISTING MEASURES

Having regard to Council Regulation (EC) No 384/96 of
22 December 1995 on protection against dumped imports
from countries not members of the European Community (1),
as last amended by Regulation (EC) No 2238/2000 (2), and in
particular Article 11(3) thereof,

solutions

(1) By Regulation (EC) No 900/2001 (3), the Council imposed
a definitive anti-dumping duty on imports of urea and
in
ammonium nitrate
the
Poland. This Regulation changed the
measure from the minimum import prices
imposed
originally by Regulation (EC) No 3319/94 into a
tonne with regard to
specific duty of 19 Euro per
Zaklady Azotowe Pulawy SA and 22 Euro per tonne for
all other Polish exporting producers.

(‘UAN’) originating
form of

(1) OJ L 56, 6.3.1996, p. 1.
(2) OJ L 257, 11.10.2000, p. 2.

(3) OJ L 127, 9.5.2001, p. 1.

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B. REQUEST FOR A REVIEW

E. DUMPING

limited to the aspects of dumping pursuant

(2) On 28 June 2001, the Polish exporting producer Zaklady
Azotowe Pulawy SA (the ‘applicant’) lodged a request for
an interim review of the anti-dumping measure applicable
to it,
to
Article 11(3) of Regulation (EC) No 384/96 (the ‘basic
Regulation’). The request provided prima facie evidence
that measures were no longer necessary to counteract
dumping, and also that this was attributable to lasting
changes in circumstances. Notably, the applicant alleged
that it had started to sell UAN on the domestic market. It
was further alleged that
the export sales pattern had
changed as the company had stopped selling through its
related exporter. The applicant had provided prima facie
evidence
showing the absence of dumping. Having
determined, after consulting the Advisory Committee,
that sufficient prima facie evidence existed for the initiation
of an interim review, the Commission published a notice
in the Official Journal of the European Communities (1) and
commenced an investigation.

C. PROCEDURE

(3) The investigation of dumping covered the period from
1 October 2000 until 30 September 2001 (the ‘investi-
gation period’ or ‘IP’).

(4) The Commission officially advised the authorities of the
exporting country of the initiation of the interim review
and gave all the parties directly concerned the oppor-
tunity to make their views known in writing and to
request a hearing.

(5) The Commission sent a questionnaire and received

detailed information from the applicant.

(6) The Commission sought and verified all

information it
deemed necessary for the purpose of a determination of
the
dumping and carried out a verification visit at
premises of the exporting producer concerned.

(7) The

applicant

industry were
and the Community
informed of the facts and considerations of the investi-
gation and were given an opportunity to comment. Their
comments were taken into account and, where appro-
priate, the findings were modified as reflected above.

1. Normal value

(9) It was first determined that 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
the Community. 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.

(10) The Community industry presented a dumping calculation
based on a constructed normal value and assumptions
the
regarding costs, prices and adjustments. However,
assumptions were not correct as they were not borne
out by the actual confidential data verified in the course
of the investigation. Moreover, no indication was found
which put into question these verified data.

(11) After

the

the

final

dumping

disclosure,

Community

industry
re-presented the calculation mentioned under (10) above
together with another calculation incorporating a normal
value based on domestic prices this time claiming that the
difference between its and the Commission's calculations
could only be due to very low gas prices. A comparison
between the data submitted by the applicant and verified
by the Commission on the one hand and the data used
for
the
calculations
important
Community industry showed that
differences were not related to the gas price issue. The
major differences between these calculations concerned
most other cost factors including adjustments, the use
factors, and the allocation of gas prices paid in certain
periods to UAN sold during the IP, and these differences
stemmed from the fact
the interested party used
that
assumed information whereas the Commission's calcu-
lation was based on verified data. Since the Community
industry was unable to provide sufficient evidence to
the
support
of
the
Commission's
are
confirmed.

accuracy
assumptions,
its
findings based on verified data

submitted
the most

by

D. PRODUCT CONCERNED AND LIKE PRODUCT

2. Export price

(8) The findings of the previous investigation as published in
Council Regulation (EC) No 900/2001 with regard to
product concerned and like product were confirmed.

(1) OJ C 288, 13.10.2001, p. 2.

(12) Since all export sales of the product concerned were made
directly to independent customers in the Community, the
export price was established in accordance with Article
2(8) of the basic Regulation on the basis of the prices
actually paid or payable.

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3. Comparison

the same level of

(13) For the purposes of a fair comparison by type on an
ex-factory basis and at
trade, due
allowance was made for differences which were claimed
and demonstrated to affect price comparability. These
transport,
adjustments were made
and
handling,
commissions in accordance with Article 2(10) of
the
basic Regulation.

in
ancillary

loading

respect

credit

costs,

and

of

(14) The applicant, having invoiced all export sales to the
Community in the IP in US Dollars, had asked for an
adjustment
to a
sustained revaluation of the Polish Zloty against the US
Dollar, which allegedly took place in the period from
October 2000 to June 2001.

conversion referring

currency

for

(15) It was

there was

that while

found, however,

the IP,
the US Dollar during the last

an
appreciation of the Polish Zloty against the US Dollar
the Polish Zloty effectively
during most of
devalued against
four
months of the IP. If the adjustment had been applied to
the transactions influenced by the upward move of the
Zloty,
it should also have been applied to the ones
effected by its downward move. The company was
unable to demonstrate that
such adjustments would
have any overall effect.

(16) Under

these circumstances,

the claim for a currency

conversion adjustment could not be accepted.

4. Dumping margin

among

different

significantly

differed
In particular,

(17) It was found that there was a pattern of export prices
time
which
it was found that export prices
periods.
during the last two months of the IP were particularly
low. This could not be explained by a similar devel-
opment of the general price level of UAN. Consequently,
a comparison of the normal value and export prices on a
weighted average basis did not reflect the full degree of
dumping being practised. A transaction by transaction
comparison on the basis of
individual export prices
with individual normal values was not possible due to
important differences between the transaction dates and
the quantities sold of the export transactions on the one
hand and the domestic transactions on the other hand. In
order to calculate the dumping margin,
the weighted
average normal value was therefore compared to prices
of all individual export transactions to the Community, in
accordance with the second sub-paragraph of Article
2(11) of the basic Regulation.

(18) After

final disclosure of

the basis on which it was
intended to amend the anti-dumping measures in force,
the Community industry argued that the dumping margin
in the original proceeding had been established on the
basis of a comparison of prices of individual export trans-

careful

individual domestic transactions
actions with prices of
and claimed that such a comparison should be carried
out in the current investigation. However, an examination
of the original files showed that this method was not used
in the original investigation. Indeed this is also evident on
a
reading of Commission Regulation (EC)
No 1506/94 (1), which states that ‘the ex-factory export
prices of UAN were compared on a transaction-by-trans-
action basis with the normal value
established as
described in recitals (12) and (13).’ Since those recitals
make clear that normal value was constructed on the
basis of the producers full fixed and variable manufac-
turing cost to which an amount for selling general and
administrative expenses as well as a reasonable profit
it is obvious that individual export
margin was added,
prices were compared to a weighted average normal
value.
it was not
possible
to carry out a transaction by transaction
comparison of individual export prices with individual
normal values due to important differences between the
transaction dates and the quantities sold of the export
transactions on the one hand and the domestic trans-
actions on the other hand. This argument was therefore
rejected.

In any event, as explained above,

(19) The comparison, as described in (17) above, showed the
existence of de minimis dumping for the applicant. The
dumping margin established, expressed as a percentage of
the total CIF value at Community frontier level, duty
unpaid, is 0,8 %.

F. LASTING NATURE OF CHANGED CIRCUMSTANCES

(20) In accordance with the Commission's normal practice, it
was examined whether the changed circumstances could
reasonably be said to be of a lasting nature. It was found
that
the applicant had significant exports of UAN to
non-EC countries during the last two financial periods
ending in December 1999 and in June 2001 as well as
during the IP. In this context, it should be mentioned that
exports to non-EC countries increased substantially during
the IP.

(21) It was also found that the applicant has made a significant
effort
to increase sales on the domestic market by
promoting the increased use of liquid fertilisers (UAN),
and by developing an extensive distribution network
supported by investments in storage facilities at the whol-
esalers premises. The applicant's domestic sales of urea
ammonium nitrate solutions thus increased by 18 %
from 2000 and by 35 % from 1999 to the IP.

(22) It should be noted that the farmers' shift to the liquid
fertiliser UAN involves investments in equipment used
for its spreading. Therefore it is reasonable to presume
that the domestic demand for UAN will be constant or
increasing in the foreseeable future.

(1) OJ L 162, 30.6.1994, p. 16.

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(23) The increased sales to markets other than the Community,
in particular the domestic Polish market, are having a
noticeable influence on the overall cost structure. This
in turn has an influence on the profitability of UAN
sales by the applicant on the domestic market and as a
consequence on the normal value.

in Poland remain subject

pursuant to Article 11 of the basic Regulation. All other
producers
to the existing
residual rate of duty, although it is open to them and
other interested parties to request a review of
these
measures in accordance with Article 11 of the basic Regu-
lation,

(24) It

is

therefore concluded that a return to dumping
practices with regard to UAN sales by the applicant in
the Community market is rather unlikely.

capacity

production

it was found that

(25) After final disclosure, the Community industry claimed
that the above changes in circumstances could not be
regarded as being of a lasting nature in particular,
because of the limited size of the domestic market in
the lack of other export markets, and the
Poland,
applicant.
enormous
However,
in
largely under-
Poland,
estimated by the Community industry, was significant
and growing, which in itself reduces the potential threat
created by the applicant's production capacity and the
In
assumed resulting dependence on export markets.
addition,
it was found that other export markets were
easily accessible for the applicant. Therefore, there was
no reason to believe the change,
the absence of
dumping, would not be of a lasting nature.

the
the domestic market

the size of which was in fact

i.e.

of

HAS ADOPTED THIS REGULATION:

Article 1

Article 1 paragraph 2 of Regulation (EC) No 900/2001 shall be
replaced by the following:

‘Article 1

The amount of

2.
the applicable duty per tonne of
product shall be as shown below for the products manu-
factured by the following companies:

Country

Company

Poland

Zaklady Azotowe Pulawy SA
Al. Tysiaclecia P.P. 13,
24-110 Pulawy
Poland

Amount of
duty (EUR
per tonne)

TARIC
additional
code

0

8795

G. CONCLUSION

Other companies

22

8900’

(26) In view of the finding of a de minimis dumping margin
for the applicant and as this situation is not considered to
be of a short-term nature, the specific anti-dumping duty
imposed by Council Regulation (EC) No 900/2001 on
exports of the applicant should be replaced by a EURO
0 duty amount.

(27) The amendment of

the measures concerns only the
applicant and not Poland as a whole. The applicant
remains subject to the proceeding and may be reinves-
tigated in any subsequent review carried out for Poland

Article 2

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

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