Proposal for a Council Regulation terminating the partial interim review of the anti-dumping measures applicable to imports of urea originating in Russia
Date: 2003-12-11
Institutions: European Commission
Subjects: Russia, anti-dumping duty, chemical fertiliser, import, originating product

COMMISSION OF THE EUROPEAN COMMUNITIES

Brussels, 11.12.2003
COM(2003) 772 final

Proposal for a

COUNCIL REGULATION

terminating the partial interim review of the anti-dumping measures applicable to
imports of urea originating in Russia

(presented by the Commission)

EN

  EN

EXPLANATORY MEMORANDUM

On 13 June 2002 a partial interim review limited to the form of the measure was initiated with
regard  to  anti-dumping  measures  imposed  by  Council  Regulation  (EC)  No  901/2001  on
imports into the Community of urea originating in Russia.

The attached proposal for a Council Regulation is based on the findings of the investigation,
which  revealed  that  the  form  of  the  measures  imposed  by  Council  Regulation  (EC)  No
901/2001 should not be changed.

It is therefore proposed that the Council adopt the attached proposal for a Council Regulation,
which should be published as soon as possible in the Official Journal of the European Union.

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Proposal for a

COUNCIL REGULATION

terminating the partial interim review of the anti-dumping measures applicable to
imports of urea originating in Russia

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  (“Basic
Regulation”), and in particular Article 11(3) thereof,

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

Whereas:

1.

(1)

2.

(2)

(3)

A. PROCEDURE

Measures in force

On 10 May 2001, the Council, by Regulation (EC) No 901/20012, imposed a definitive
anti-dumping duty on imports of urea originating in Russia. The duty took the form of
a variable duty on the basis of a minimum import price (“MIP”).

Initiation

On  13  June  2002,  the  Commission  announced  by  a  notice  published  in  the  Official
Journal of the European Communities3 (“notice of initiation”) the initiation of a partial
interim  review  of  the  anti-dumping  measures  applicable  to  imports  into  the
Community  of  urea  originating  in  Russia  pursuant  to  Article  11(3)  of  the  Basic
Regulation.

The review was initiated on the initiative of the Commission in order to examine the
appropriateness of the form of the measures in force, currently an MIP, as it does not
differentiate between sales made to related parties and sales made to unrelated parties,
or  between  first  sales  and  successive  sales  to  the  Community  and  it  had  become
apparent  that  this  could  lead  to  enforcement  problems.  Consequently,  the  existing
measures did not appear sufficient to counteract the dumping which is causing injury.

1

2

3

OJ L 56, 6.3.1996, p. 1, as last amended by Regulation (EC) No 1972/2002 (OJ L 305, 7.11.2002, p. 1).
OJ L 127, 9.5.2001, p. 11.
OJ C 140, 13.6.2002, p. 5.

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3.

(4)

(5)

Investigation

The  Commission  officially  advised  the  importers,  the  users  known  to  be  concerned
and their associations, the representatives of the exporting country concerned and the
Community  producers  about  the  initiation  of  the  proceeding.  Interested  parties  were
given the opportunity to make their views known in writing and to request a hearing
within the time limit set out in the notice of initiation.

An association of Community producers, an association of importers, two associations
of users, one user and a company representing ten Italian importers, traders and users
made  their  views  known  in  writing.  All  parties  which  so  requested  within  the  time
limit, and which demonstrated that there  were particular reasons why they  should be
heard, were granted the opportunity to be heard.

(6)

The Commission sought and verified all the information it deemed necessary  for the
purpose of a determination of the appropriateness of the measures in force.

(7)

(8)

(9)

B. FINDINGS OF THE INVESTIGATION

The initiation of an interim review was motivated by the necessity to limit the risk of
duty  avoidance.  Such  duty  avoidance  can  occur  in  different  circumstances.  When
exporters  currently  subject  to  the  measures  imposing  an  MIP  export  to  the
Community, they could  be  in  a  position  to  invoice  at  a  price  above  the  MIP,  and  to
subsequently compensate such a price after customs declaration by an agreement with
the importers. This may render the MIP ineffective, as it would mean that the product
concerned is effectively still exported below the MIP to the Community. Accordingly,
this could lead to subsequent resale  prices  in  the  Community  which  prevent  that  the
intended  effects  of  the  measure,  i.e.  to  remove  the  injurious  effects  of  dumping,  are
achieved. The substantial risk of price manipulation when duties take the form  of  an
MIP  was  highlighted  by  the  findings  of  the  European  Court  of  Auditors  in  its  2000
Annual Report4. In order to address this problem, it was envisaged to replace the MIP
by an ad valorem duty.

Although an ad valorem duty is, in general, considered to be more appropriate to avoid
the risk of price manipulation,  it  was  found  that  in  the  specific  circumstances  of  the
current case the risk of price manipulation is very low since, over a sustained period of
time, import prices in general have actually been above the MIP. Therefore, exporters
would  not  have  any  reason  to  manipulate  prices  in  the  way  set  out  in  recital  (7)  in
order  to  stay  competitive.  This  was  also  confirmed  by  the  comments  made  by
interested  parties  which,  with  the  exception  of  the  association  of  Community
producers, considered that the form of the measure should not be changed.

The association of Community producers  considered that a specific duty would have
been more appropriate to avoid the risk of price manipulation. It also considered that
an ad valorem duty would be more effective than an MIP. It was, however, established
that in the specific circumstances of the current case the risk of price manipulation is
very low. Nevertheless, should the situation of the urea market change and evidence is
provided to the Commission that this change increases the risk of price manipulation,
appropriate  action  may  be  taken.  Meanwhile,  the  Commission  will  pay  particular

4

OJ C 359, 15.12.2001, p. 1, recitals 1.31 and 1.35.

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attention  to  the  import  prices  of  urea  originating  in  Russia  and  the  attention  of  the
customs authorities is drawn to this issue.

(10)

It is therefore concluded that, due to the particular and very specific circumstances of
the  present  case,  there  are  currently  no  reasons  to  change  the  form  of  the  measure
concerning imports of urea originating in Russia and the current partial interim review
should be terminated without any amendment to the anti-dumping measures imposed
by Council Regulation (EC) No 901/2001,

HAS ADOPTED THIS REGULATION:

Article 1

The  partial  interim  review  of  the  anti-dumping  measures  applicable  to  imports  of  urea
originating  in  Russia,  initiated  pursuant  to  Article  11(3)  of  Council  Regulation  (EC)  No
384/96, is hereby terminated without amending the anti-dumping duty in force.

Article 2

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

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

Done at Brussels,

For the Council
The President

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