Proposal for a Council Regulation terminating the partial interim review pursuant to Article 11(3) of Regulation (EC) No 384/96 of the anti-dumping duty on imports of solutions of urea and ammonium nitrate originating in Russia
Date: 2008-02-15
Institutions: European Commission
Subjects: Russia, anti-dumping duty, anti-dumping legislation, fertiliser, import, originating product

COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 15.2.2008 
COM(2008) 84 final 

Proposal for a 

COUNCIL REGULATION 

terminating the partial interim review pursuant to Article 11(3) of Regulation (EC) No 
384/96 of the anti-dumping duty on imports of solutions of urea and ammonium nitrate 
originating in Russia 

(presented by the Commission) 

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EXPLANATORY MEMORANDUM 

CONTEXT OF THE PROPOSAL 

Grounds for and objectives of the proposal 

This  proposal  concerns  the  application  of  Council  Regulation  (EC)  No  384/96  of 
22 December 1995 on protection against dumped imports from countries not members 
of  the  European  Community,  as  last  amended  by  Council  Regulation  (EC) 
No 2117/2005  of  21  December  2005  ('the  basic  Regulation')  in  the  proceeding 
concerning imports of solutions of urea and ammonium nitrate originating in Russia. 

General context 

This proposal is made in the context of the implementation of the basic Regulation and 
is the result of an investigation which was carried out in line with the substantive and 
procedural requirements laid out in the basic Regulation. 

Existing provisions in the area of the proposal 

The measures currently in force were imposed by Council Regulation (EC) No 1995/2000 
and  confirmed  by  Council  Regulation  (EC)  No  1911/2006  imposing  a  definitive  anti-
dumping duty on imports of solutions of urea and ammonium nitrate originating, inter 
alia, in Russia. 

Consistency with the other policies and objectives of the Union 

Not applicable. 

CONSULTATION OF INTERESTED PARTIES AND IMPACT ASSESSMENT 

Consultation of interested parties 

Interested parties concerned by the proceeding have had the possibility to defend their 
interests during the investigation, in line with the provisions of the basic Regulation. 

Collection and use of expertise 

There was no need for external expertise. 

Impact assessment 

This proposal is the result of the implementation of the basic Regulation. 

The  basic  Regulation  does  not  foresee  a  general  impact  assessment  but  contains  an 
exhaustive list of conditions that have to be assessed. 

LEGAL ELEMENTS OF THE PROPOSAL 

Summary of the proposed action 

On 19 December 2006, the Commission initiated an interim review of the measures in 

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force in respect of solutions of urea and ammonium nitrate originating in Russia further 
to a request made by two related exporting producers in Russia, belonging to the Joint 
Stock Company "Mineral and Chemical Company Eurochem". The request was based 
on  prima  facie  evidence  that  the  circumstances  on  the  basis  of  which  measures  were 
established  have  changed  and  therefore  the  continued  imposition  of  measures  at  the 
existing levels would no longer be necessary to offset dumping. 

The  attached  proposal  for  a  Council  Regulation  is  based  on  the  findings  of  the 
investigation carried out which is limited in scope to the examination of dumping as far 
as the applicant is concerned. 

The investigation showed that dumping took place during the investigation period. The 
level  of  the  dumping  found  was  higher  than  the  one  during  the  investigation  period 
which led to the imposition of the definitive duties. It was also higher than the injury 
elimination level which forms the basis of the current measures in force. Therefore, no 
circumstances  have  changed  in  such  a  way  as  to  no  longer  render  necessary  the 
existing measures to  offset dumping.  It was also found that the circumstances during 
the current investigation period were of a lasting nature.  

It is therefore proposed that the Council adopt the attached proposal for a Regulation 
that  would  terminate  the  review  without  amending  the  anti-dumping  measures 
currently in force, which should be published in the  Official  Journal no later than 18 
March 2008. 

Legal basis 

Council  Regulation  (EC)  No  384/96  of  22  December  1995  on  protection  against 
dumped  imports  from  countries  not  members  of  the  European  Community,  as  last 
amended by Council Regulation (EC) No 2117/2005 of 21 December 2005.  

Subsidiarity principle 

The proposal falls under the exclusive competence of the Community. The subsidiarity 
principle therefore does not apply. 

Proportionality principle 

The proposal complies with the proportionality principle for the following reasons:  

The form of action is described in the above-mentioned basic Regulation and leaves no 
scope for national decision. 

Indication  of  how  financial  and  administrative  burden  falling  upon  the  Community, 
national governments, regional and local authorities, economic operators and citizens is 
minimized and proportionate to the objective of the proposal is not applicable. 

Choice of instruments 

Proposed instruments: regulation. 

Other  means  would  not  be  adequate  for  the  following  reason:  The  above-mentioned 

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basic Regulation does not foresee alternative options. 

BUDGETARY IMPLICATION 

The proposal has no implication for the Community budget. 

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. 

Proposal for a 

COUNCIL REGULATION 

terminating the partial interim review pursuant to Article 11(3) of Regulation (EC) No 
384/96 of the anti-dumping duty on imports of solutions of urea and ammonium nitrate 
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 ('the 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. MEASURES IN FORCE 

A. PROCEDURE 

(1) 

(2) 

By  Regulation  (EC)  No  1995/20002,  the  Council  imposed  a  definitive  anti-dumping 
duty on imports of solutions of urea and ammonium nitrate (UAN) originating, inter 
alia,  in  Russia.  This  regulation  will  hereinafter  be  referred  to  as  'the  original 
Regulation'  and  the  investigation  that  led  to  the  measures  imposed  by  the  original 
Regulation will be hereinafter referred to as 'the original investigation'.  

Following  an  expiry  review  initiated  in  September  2005,  the  Council,  by  Regulation 
(EC) No 1911/20063, renewed for five years these measures at their current level. The 
measures  consist  of  specific  duties.  This  regulation  will  hereinafter  be  referred  to  as 
'the expiry Regulation' and the investigation that led to the measures imposed by the 
expiry Regulation will be hereinafter referred to as 'the expiry review'. 

2. REQUEST FOR A REVIEW  

1 

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3 

OJ  L  56,  6.3.1996,  p.  1.  Regulation  as  last  amended  by  Regulation  (EC)  No  2117/2005  (OJ  L  340, 
23.12.2005, p. 17). 
OJ L 238, 22.9.2000, p. 15. 
OJ L 365, 21.12.2006, p. 26. 

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(3) 

(4) 

A request for a partial interim review ('the present review') pursuant to Article 11(3) of 
the basic Regulation was lodged by two exporting producers from Russia, belonging 
to  the  Joint  Stock  Company  "Mineral  and  Chemical  Company  Eurochem",  namely 
Novomoskovskiy Azot and Nevinnomyssky Azot. These two companies, due to their 
relationship,  are  treated  as  one  legal  entity  ('the  applicant')  for  the  purpose  of  the 
present review. The request was limited in scope to dumping as far as the applicant is 
concerned. 

The applicant alleged that the comparison of its own normal value and, in the absence 
of exports to the European Community, export prices to an appropriate third country, 
in  this  case,  the  United  States  of  America  (USA),  would  lead  to  a  reduction  of 
dumping significantly below the level of the current measures. 

3. INVESTIGATION 

(5) 

(6) 

(7) 

(8) 

(9) 

Having  determined,  after  consulting  the  Advisory  Committee,  that  the  request 
contained  sufficient  prima  facie  evidence,  the  Commission  announced  on  19 
December 2006 the initiation of a partial interim review pursuant to Article 11(3) of 
the basic Regulation by a notice of initiation published in the Official Journal of the 
European Union4. 

The  review  was  limited  in  scope  to  the  examination  of  dumping  in  respect  of  the 
applicant. The investigation of dumping covered the period from 1 October 2005 to 30 
September 2006 ('the review investigation period' or 'RIP'). 

The Commission officially informed the applicant, the representatives of the exporting 
country and the association of Community producers about the initiation of the review. 
Interested  parties  were  given  the  opportunity  to  make  their  views  known  in  writing 
and to request a hearing within the time limit set in the notice of initiation. 

All interested parties, who so requested and showed that there were particular reasons 
why they should be heard, were granted a hearing. 

In  order  to  obtain  the  information  deemed  necessary  for  its  investigation,  the 
Commission  sent  questionnaires  to  Joint  Stock  Company  "Mineral  and  Chemical 
Company  Eurochem"  and  its  related  companies  and  received  replies  within  the 
deadlines set for that purpose.  

(10)  The  Commission  sought  and  verified  all  information  deemed  necessary  for  the 
determination  of  dumping.  The  Commission  carried  out  verification  visits  at  the 
premises of the applicant and its related companies: 

– 

– 

– 

– 

JSC Mineral and Chemical Company (Eurochem), Moscow, Russia; 

PJSC Azot (NAK Azot), Novomoskovsk, Russia; 

PJSC Nevinnomyssky Azot (Nevinka Azot), Nevinnomyssk, Russia and 

Eurochem Trading GmbH, Zug, Switzerland – (Eurochem Trading). 

4 

OJ C 311, 19.12.2006, p. 51. 

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B. PRODUCT CONCERNED AND LIKE PRODUCT 

1. PRODUCT CONCERNED 

(11)  The  product  concerned  is  the  same  as  in  the  original  investigation,  i.e.  a  solution  of 
urea  and  ammonium  nitrate,  a  liquid  fertiliser  commonly  used  in  agriculture, 
originating in Russia ('UAN'). It consists of a mixture of urea, ammonium nitrate and 
water.  The  water  content  is  approximately  70  %  of  the  mixture  (depending  on  the 
nitrogen content), the remaining part consisting equally of urea and ammonium nitrate. 
The  nitrogen  (N)  content  is  the  most  significant  "feature"  of  the  product,  and  it  can 
vary between 28 % and 32 %. Such variation can be obtained by adding more or less 
water to the solution. However, whatever their nitrogen content, all solutions of urea 
and  ammonium  nitrate  are  considered  to  have  the  same  basic  physical  and  chemical 
characteristics  and  therefore  constitute  a  single  product  for  the  purpose  of  this 
investigation. The product concerned falls within CN code 3102 80 00.  

2. LIKE PRODUCT 

(12)  This  review  investigation  confirmed  that  UAN  is  a  pure  commodity  product,  and  its 
quality and basic physical characteristics are identical whatever the country of origin. 
The UAN solutions manufactured and sold by the applicant on its domestic market in 
Russia and, in the absence of exports to the European Community, those exported to 
the  United  States  of  America  have  the  same  basic  physical  and  chemical 
characteristics and essentially the same uses. Therefore, these products are considered 
to be like products within the meaning of Article 1(4) of the basic Regulation. Since 
the present review was limited to the determination of dumping as far as the applicant 
is  concerned,  no  conclusions  were  reached  with  regard  to  the  product  produced  and 
sold by the Community industry in the Community market. 

C. RESULTS OF THE INVESTIGATION  

1. PRELIMINARY REMARKS  

(13)  As announced in the notice of initiation, since the applicant did not have export sales 
of  UAN  to  the  European  Community  during  the  RIP,  the  current  investigation 
examined  first  to  what  extent  export  prices  to  a  third  country  should  be  used  in 
deciding whether the basis on which existing measures were established has changed 
and whether these changes are of a lasting nature.  

(14)  The applicant supplied evidence that due to the duties in force, the product could not 
be sold for export to the Community market during  the RIP. The applicant provided 
prima facie evidence that export prices to the USA, a representative third market, were 
not dumped or at least to a lesser extent than the dumping margin currently established 
for  exports  to  the  European  Community  and  that  it  was  appropriate  to  use  export 
prices to the USA. -For the reasons set out below in recital (43) and following, export 
prices to the third country USA were found to be appropriate because the US market 
was comparable to the Community market and therefore representative.  

(15) 

It should be noted that the measures currently applicable are partly based on data not 
linked  to  the  applicant's  own  production  and  sales  of  the  product  concerned,  while 
during  the  current  RIP  verified  information  related  to  the  applicant's  own  data 

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pertaining to the normal value and export prices, albeit to a third country market, was 
available. On  this basis,  it was concluded  that  the  dumping  margin  found  during  the 
current RIP reflected more accurately the situation of the applicant during the RIP than 
the measures currently in force.  

(16) 

In this context, it was also considered that the objective of an anti-dumping duty is not 
to close the Community market from third country imports but to restore a fair level 
playing field.  

(17)  Given the above specific circumstances, it was therefore concluded that the calculation 
of  the  dumping  margin  during  the  RIP  on  the  basis  of  export  sales  prices  of  the 
applicant to the USA was appropriate.  

2. NORMAL VALUE 

(18) 

In order to establish the normal value, it was first verified that the total domestic sales 
of  the  applicant  were  representative  in  accordance  with  Article  2(2)  of  the  basic 
Regulation.  Since  the  applicant  did  not  have  export  sales  of  UAN  to  the  European 
Community  during  the  RIP,  overall  domestic  sales  quantities  of  the  applicant  were 
compared to all exports of UAN by the applicant to the United States. In accordance 
with  Article  2(2)  of  the  basic  Regulation,  domestic  sales  should  be  considered 
representative in case the total volume of such sales is equal to or greater than 5% of 
the  total  volume  of  the  corresponding  export  sales,  in  this  case  to  the  United  States. 
The  investigation  showed  that  the  applicant  did  not  sell  representative  quantities  of 
UAN on the domestic market. 

(19)  Since on this basis the domestic prices of the applicant could not be used to establish 
normal  value,  normal  value  was  constructed  on  the  basis  of  the  manufacturing  costs 
incurred  by  the  applicant  plus  a  reasonable  amount  for  selling,  general  and 
administrative  costs  ('SG&A  costs')  and  for  profits,  in  accordance  with  Article  2(3) 
and (6) of the basic Regulation. 

(20)  Regarding  the  cost  of  manufacturing,  it  should  be  noted  that  gas  costs  represent  a 
major  proportion  of  the  manufacturing  cost  and  a  significant  proportion  of  the  total 
cost  of  production.  In  accordance  with  Article  2(5)  of  the  basic  Regulation,  it  was 
examined  whether  the  costs  associated  with  the  production  and  sales  of  the  product 
concerned were reasonably reflected in the records of the applicant. 

(21) 

It was established on the basis of data published by internationally recognised sources 
specialised  in  energy  markets,  that  the  prices  paid  by  the  applicant  were  abnormally 
low.  By  way  of  illustration,  they  amounted  to  one  forth  and  one  fifth  of  the  export 
price  of  natural  gas  from  Russia.  In  this  regard,  all  available  data  indicates  that 
domestic gas prices in Russia were regulated prices, which are far below market prices 
paid  in  unregulated  markets  for  natural  gas.  Since  gas  costs  were  not  reasonably 
reflected in the applicant's records, they had to be adjusted accordingly. In the absence 
of  any  undistorted  gas  prices  relating  to  the  Russian  domestic  market,  and  in 
accordance with Article 2(5) of the basic Regulation, gas prices had to be established 
on  'any  other  reasonable  basis,  including  information  from  other  representative 
markets'.  

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(22)  The adjusted price was based on the average price of Russian gas when sold for export 
at the German/Czech border (Waidhaus), net of transport costs and adjusted to reflect 
local distribution costs. Waidhaus, being the main hub for Russian gas sales to the EU, 
which is both the largest market for Russian gas and has prices reasonably reflecting 
costs, can be considered a representative market within the meaning of Article 2(5) of 
the basic Regulation. 

(23)  Following disclosure, the applicant claimed that any adjustment of its gas  price  paid 
on  the  domestic  market  would  be  unwarranted  alleging  that  its  accounting  records 
fully reflected the costs associated with the activity of production and sales of the like 
product  in  the  country  of  origin.  To  substantiate  this  claim,  the  applicant  provided  a 
study  from  an  independent  consultancy  firm  that  the  gas  price  paid  by  the  applicant 
reflected  full  cost  of  production  and  sale  of  gas,  as  incurred  by  the  gas  provider.  It 
should first be noted that, as the study itself sets out, the costs of gas as well as the cost 
of the delivery of the gas to the applicant used for the comparison were estimated costs 
and thus not actual costs incurred during the RIP. It is also unclear whether the costs 
thus established were full costs as established in accordance with the basic Regulation, 
i.e. including full costs of manufacturing and full SG&A costs linked to the production 
and  sale  of  gas.  Finally,  it  is  also  noted  that  the  information  available  on  the  gas 
provider's costs could not be verified within the framework of this proceeding. 

(24) 

In any case,  it  is considered that under Article 2(5) of the basic Regulation, the sole 
fact that the price of gas charged by the supplier to its client is cost covering is as such 
not  a  criterion  to  establish  whether  the  costs  of  production  of  the  like  product  as 
booked in the company's accounts are reasonably reflecting the costs associated with 
the  production  and  sale  of  the  product  under  investigation.  For  the  reasons  set  out 
above in recital (21), this was found not to be the case. The applicant did not address 
the  apparent  significant  difference  between  the  price  for  gas  paid  on  the  Russian 
domestic market and the export price of natural gas from Russia on the one hand and 
the one paid by the Community producers on the other hand. It did also not address the 
fact  that  domestic  prices  for  natural  gas  were  regulated  in  Russia  and  could  not  be 
considered  to  reasonably  reflect  a  price  normally  payable  in  undistorted  markets. 
Therefore,  even  if  the  gas  price  paid  by  the  applicant  covered  the  unit  cost  of 
production  and  sales  of  the  gas  incurred  by  its  provider,  this  argument  is  irrelevant 
since the market price of gas is not necessarily directly linked to costs of its production 
and  sales.  The  price  at  which  the  applicant  was  purchasing  the  gas  during  the  RIP 
continues to be State regulated and significantly below the price level in non-regulated 
markets as explained in recital (21) above. This claim therefore had to be rejected. 

(25)  The  applicant  further  claimed  that  by  making  a  gas  adjustment,  de  facto  a 
methodology to determine normal value was used which is not foreseen by the basic 
Regulation.  Thus,  by  replacing  domestic  gas  costs  by  costs  calculated  as  described 
above in recital (22), and due to the fact that these costs constitute major part of the 
total costs of the like product and therefore also of the constructed normal value, the 
normal  value  would  be  de  facto  determined  by  data  from  a  third  "representative" 
market.  In  this  regard,  the  applicant  argued  that  for  market  economy  countries,  the 
basic  Regulation  however  foresees  ,  only  the  following  methodologies  to  determine 
the  normal  value:  (i)  on  the  basis  of  the  domestic  price  of  the  like  product  in  the 
ordinary  cause  of  trade,  or  alternatively,  in  case  sales  are  not  made  in  the  ordinary 
course of trade, (ii) on the basis of the cost of production in the country of origin (plus 
a  reasonable  amount  for  SG&A  costs  and  for  profits)  or  (iii)  representative  export 

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prices of the like product to an appropriate third country. The applicant concluded that 
on  this  basis  normal  value  should  not  be  based  on  data  from  a  third  representative 
market. 

(26) 

In this regard and as also outlined in recitals (18) to (42), it should first be noted that 
normal value was established in accordance with the methodologies outlined in Article 
2(1) to (6) of the basic Regulation. However, in order to  establish whether  domestic 
sales were made in the ordinary course of trade by reason of price, i.e. whether they 
were profitable, it must first be established whether the costs of the applicant were a 
reliable  basis  within  the  meaning  of  Article  2(5)  of  the  basic  Regulation.  Only  after 
costs  have  been  reliably  established,  can  it  be  determined  which  methodology  to 
establish  normal  value  should  be  used.  It  is  therefore  wrong  to  claim  that  by 
determining  reliable  costs  in  accordance  with  Article  2(5)  of  the  basic  Regulation  a 
new  methodology  to  determine  normal  value  was  introduced.  The  applicant's 
arguments in this respect therefore had to be rejected. 

(27)  The applicant further argued that even in case that an adjustment was to be made to its 
cost  of  natural  gas  on  the  domestic  market,  Waidhaus  price  for  Russian  natural  gas 
was not a reliable basis for such an adjustment since that price is set according to long 
term  gas  contracts  under  which  the  price  formula  is  linked  to  oil  product  prices  and 
thus unrelated to the costs of producing and delivering gas to the applicant in Russia. 
The  applicant  further  argued  that  Waidhaus  price  for  Russian  gas  is  not  reliable 
because  it  is  affected  by  excessively  high  and  possibly  non-competitive  domestic 
pricing  on  gas  in  Germany,  which  is  being  investigated  by  German  Antitrust 
Authorities.  

(28)  Firstly, it should be noted that one of the primary criteria for the choice of the basis on 
which  to  establish  the  gas  prices  was  that  it  reasonably  reflects  a  price  normally 
payable in undistorted markets. It is undisputed that this condition is met with respect 
to the prices at Waidhaus. Furthermore, by far the greatest volume of gas from Russia 
is imported via the Waidhaus hub which represents therefore an appropriate basis for 
an adjustment. On this basis, Waidhaus was considered as a representative market and 
a reasonable basis for the determination of gas costs within the meaning of Article 2(5) 
of the basic Regulation. Secondly, as outlined in recital (24), it is on its own irrelevant 
whether  the  price  is  cost  driven  as  long  as  it  reasonably  reflects  a  price  normally 
payable  in  undistorted  markets.  As  regards  the  price  of  gas  imported  at  Waidhaus, 
there are no indications of State interference in price forming and this condition is thus 
met.  Finally,  as  regards  the  claim  about  non-competitive  domestic  pricing  on  gas  in 
Germany  it  should  be  noted  that  the  Bundeskartellamt’s  investigation,  to  which  the 
applicant  referred  to,  is  still  ongoing  and  no  conclusions  were  reached.  Besides,  this 
investigation concerns prices at which German main gas distributors sell the gas on the 
German  domestic  market  and  not  the  price  at  which  they  purchase  the  gas  imported 
from Russia. In contrast to what was claimed by the applicant, these two prices are not 
necessarily related since the economic interest of gas distributors and their customers 
is exactly the opposite. Thus, it can be presumed that the distributors aim to keep the 
resale  price  at  the  highest  possible  level  whereby  at  the  same  time  it  is  in  their 
economic  interest  to  keep  the  purchase  price  at  the  lowest  possible  level  in  order  to 
maximise profit levels. The applicant's argument that the German incumbents do not 
have an incentive to negotiate low prices for Russian imported gas at Waidhaus is a 
mere  presumption  without  any  factual  background.  Consequently,  these  arguments 
were rejected. 

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(29)  The  applicant  further  claimed  that  if  an  adjustment  were  to  be  made  to  its  cost  of 
natural gas on the domestic market, such adjustment should be based on non-regulated 
gas prices available in Russia. Firstly, the fact that the Commission could have chosen 
a  different  basis  does  not  render  the  choice  of  Waidhaus  unreasonable.  The  primary 
criterion  for  the  choice  of  the  basis  on  which  to  establish  the  gas  price  is  that  it 
reasonably  reflects  a  price  normally  payable  in  undistorted  markets.  It  is  undisputed 
that this condition is met with respect to the prices at Waidhaus. Secondly, the fact that 
the volume of gas sold at non-regulated prices in the domestic market was only minor 
during the RIP and that such prices were significantly closer to the regulated domestic 
price  than  to  the  freely-determined  export  price  strongly  suggests  that  these  non-
regulated  prices  were  distorted  by  the  prevailing  regulated  prices.  Therefore,  the 
unregulated domestic prices could not be used. 

(30)  The applicant further argued that domestic prices for natural gas in Russia regulated by 
the State are increasing constantly and reaching levels covering the cost of production 
of  gas.  Therefore,  the  price  on  the  domestic  market  cannot  be  considered  as 
uncompetitive or unreasonably low.  

(31)  This argument has no grounds since the correct standard for choosing a representative 
market  is  not  whether  prices  are  profitable  as  such  but  whether  prices  reasonably 
reflect  a  price  normally  payable  in  undistorted  markets,  as  explained  in  recital  (29) 
above.  This  is  not  the  case  for  prices  regulated  by  the  State.  Furthermore,  this 
argument also contradicts public statements of the Russian gas supplier (as confirmed 
by its published audited accounts) that the Russian domestic gas prices do not cover 
production, transportation and sales cost. Therefore, this argument was rejected.  

(32)  The  applicant  further  proposed  the  use  of  Russian  export  price  to  the  neighbouring 
markets  as  an  alternative  basis  for  the  adjustment,  however  without  providing  any 
further information or evidence on such markets. It was considered that Russian export 
prices  of  gas  to  the  Baltic  States,  where  some  price  information  was  available,  were 
not  sufficiently  representative,  due  to  the  relatively  low  export  volumes  to  these 
countries  =-.  Furthermore,  necessary  data  concerning  transportation  and  distribution 
cost were not available and therefore, reliable prices to the Baltic States could in any 
case  not  be  established.  Therefore,  these  prices  could  not  be  used  as  a  basis  for  the 
adjustment. 

(33)  Alternatively, the applicant argued that if the export price at Waidhaus was to be used, 
the  Russian  export  duty  payable  for  all  exports  should  have  been  deducted  from  the 
Waidhaus price because it was not incurred domestically.  

(34) 

Indeed the market price at Waidhaus, which was considered as representative market 
within  the  meaning  of  Article  2(5)  of  the  basic  Regulation,  is  the  price  after  export 
taxes and not the prices before these taxes. From the perspective of the buyer it is the 
price  it  has  to  pay  at  Waidhaus  which  is  relevant,  and  in  this  regard  it  is  irrelevant 
what percentage of that price constitutes an export tax and what percentage is paid to 
the gas supplier. The latter, on the other hand will always try to maximise its price and 
therefore charge the highest price its customers are willing to pay. Given that this price 
is always well above its costs of production, allowing the gas supplier to make huge 
profits, its price setting is not primarily influenced by the amount of the export tax but 
by what price its customers are willing to pay. It was therefore concluded that the price 

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including  the  export  tax,  and  not  the  price  before  that  tax,  is  the  undistorted  market 
driven price. Consequently, the arguments of the applicant in this regard were rejected. 

(35) 

In  this  context,  the  applicant  also  claimed  that  the  mark-up  of  the  local  distributor 
should  not  be  added  to  the  export  price  at  Waidhaus  claiming  that  profits  of  the 
distributors  would  already  be  included  in  the  price  at  Waidhaus.  In  this  regard,  the 
applicant claimed that the local distributors in Russia were fully owned subsidiaries of 
the  gas  supplier  and  therefore,  addition  of  the  profit  of  these  distributors  could 
constitute  double  counting.  The  applicant  also  claimed  that  natural  comparative 
advantage  of  Russia  should  be  taken  into  account.  It  argued  further  that  since  gas  is 
largely available in Russia but not in the Community, domestic prices in Russia would 
be  naturally  lower  than  the  price  of  the  exported  gas,  which  should  have  been  taken 
into account when determining the adjustment to the gas prices paid on the domestic 
market.  

(36) 

It  is  first  noted  that  the  mark-up  of  local  distributors  do  not  only  include  the  profit 
margin  of  these  companies  but  also  their  costs  between  purchase  and  re-sale  of  the 
natural gas. 

(37)  Secondly, this argument could not be sufficiently verified anymore. This is due to the 
fact that the gas supplier in Russia and its affiliations were not subject to the present 
investigation and that therefore there was insufficient information of the organisation 
and  its  cost  structure  available.  It  is  also  noted  that  the  situation  in  Russia  in  this 
regard  due  to,  inter  alia,  the  close  links  between  the  gas  supplier  and  the  Russian 
government  is  not  sufficiently  transparent  to  allow  sufficient  access  to  the  necessary 
evidence. 

(38)  Moreover, the applicant, who has the burden proof, was not able to submit any further 
information  or  evidence  which  showed  whether  and  to  what  extend  distribution  cost 
were indeed included in the Waidhaus price. However, since domestic customers were 
purchasing the gas from local suppliers, it had to be assumed that they would have to 
pay local distribution costs which are not as such included in the unadjusted Waidhaus 
price.  Therefore,  at  this  stage  of  the  proceeding  it  had  to  be  considered  that  this 
adjustment was warranted and consequently the argument was rejected. 

(39)  However,  the  Community  Institutions  also  considered  that  the  impact  on  the 
calculation  of  the  dumping  margin  of  this  specific  adjustment  may  be  significant. 
Therefore,  given  the  particular  situation  described  above  in  recital  (37),  it  was 
considered that if the applicant supplies sufficient verifiable evidence, the Commission 
may consider the re-opening of the investigation in this regard. 

(40)  As far as the claimed comparative advantages are concerned regarding the availability 
of natural gas in Russia, it should be noted that as mentioned in recital (28) above, the 
primary criterion for the choice of Waidhaus prices as a basis on which to establish the 
gas  prices  is  that  they  reasonably  reflect  a  price  normally  payable  in  undistorted 
markets. The market conditions prevailing in the domestic market are irrelevant in this 
context. This argument had therefore to be rejected.  

(41)  SG&A costs and profit could not be established on the basis of the chapeau of Article 
2(6),  first sentence, of  the basic Regulation because, after the adjustment for the gas 
cost mentioned in recital (22), the applicant did not have representative domestic sales 

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(42) 

of the product concerned in the ordinary course of trade pursuant to Article 2(4) of the 
basic  Regulation.  Article  2(6)(a)  of  the  basic  Regulation  could  not  be  applied,  since 
only  the  applicant  is  subject  to  the  investigation.  Article  2(6)(b)  was  not  applicable 
either, since for products belonging to the same general category of goods natural gas 
is likewise the by far most important raw material and therefore manufacturing costs 
would  very  likely  also  need  to  be  adjusted,  for  the  reasons  indicated  in  recital  (21) 
above.  In  the  framework  of  this  interim  review,  no  information  was  available  to 
properly quantify such adjustment and to establish SG&A costs and the relevant profit 
margins  when  selling  these  products  after  such  adjustment.  Therefore,  SG&A  costs 
and profit were established pursuant to Article 2(6)(c) of the basic Regulation on the 
basis of a reasonable method. 

In  this  respect,  consideration  was  given  to  publicly  available  information  relating  to 
major companies operating in the nitrogen fertilisers business sector. It was found that 
the corresponding data from North American (USA and Canada) producers would be 
the most appropriate for the purpose of the investigation, given the large availability of 
reliable and complete public financial information from listed companies in this region 
of the world. Moreover, the North American market showed a significant volume of 
domestic sales and a considerable level of competition from both domestic and foreign 
companies.  Therefore,  SG&A  costs  and  profit  were  established  on  the  basis  of  the 
weighted  average  of  SG&A  costs  and  profit  from  three  North  American  producers, 
which were found to be amongst the largest companies in the fertilisers’ sector, with 
regard  to  their  North  American  sales  of  the  same  general  category  of  products 
(nitrogen fertilisers). These three producers were considered to be representative of the 
nitrogen  fertilisers’  business  (on  average  over  78,15%  of  the  turnover  of  the 
company/business segment) and their SG&A costs and profit as representative of the 
same  type  of  costs  normally  incurred  by  companies  operating  successfully  in  that 
business segment. Furthermore, there is no indication suggesting that the amount for 
profit  so  established  exceeds  the  profit  normally  realised  by  Russian  producers  on 
sales of products of the same general category on their domestic market. 

3. EXPORT PRICE 

(43)  As mentioned above in recital (13), the applicant did not have export sales of UAN to 
the European Community during the RIP. Therefore, for the reasons set out in recitals 
(14)  to  (17)  it  was  considered  appropriate  to  examine  the  pricing  behaviour  of  the 
applicant  to  other  export  markets  in  order  to  calculate  the  dumping  margin.  In  the 
notice of initiation, the USA was envisaged as an appropriate market for comparison 
purposes,  being  the  applicant's  major  export  market  representing  over  70%  of  the 
applicant's export quantities during the RIP.  

(44)  None  of  the  interested  parties  commented  on  the  choice  of  the  USA  as  the  most 
appropriate  market  for  comparison  purposes.  The  investigation  confirmed  that  the 
USA market for UAN is the most appropriate for the purpose of comparison since the 
European  Community  and  the  USA  represent  the  two  major  UAN  markets  in  the 
world, which are comparable both in terms of volume and prices. 

(45)  Since export sales of the applicant to the USA during the RIP were made via a related 
trader located in Switzerland, the export price had to be established in accordance with 
Article  2(9)  of  the  basic  Regulation.  Thus,  the  export  price  was  constructed  on  the 
basis  of  prices  actually  paid  or  payable  to  the  applicant  by  the  first  independent 

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customer in the USA, its major export market. A notional commission corresponding 
to the mark-up of the related trader, which can be considered similar to the role of an 
agent acting on a commission basis was deducted from these prices.  

4. COMPARISON 

(46)  The  normal  value  and  export  price  were  compared  on  an  ex-works  basis.  For  the 
purpose of ensuring a fair comparison between the normal value and the export price, 
due allowance in the form of adjustments was made for differences affecting price and 
price  comparability  in  accordance  with  Article  2(10)  of  the  basic  Regulation. 
Accordingly,  adjustments  were  made  for  differences  in  transport,  handling,  loading 
and ancillary costs, where applicable and supported by verified evidence. 

5. DUMPING MARGIN 

(47)  The  dumping  margin  was  established  on  the  basis  of  a  comparison  of  a  weighted 
average normal value with a weighted average export price, in accordance with Article 
2(11) of the basic Regulation. 

(48)  This comparison showed a dumping margin of 31,59%, expressed as a percentage of 

the CIF North American frontier price, duty unpaid. 

6. LASTING NATURE OF THE CIRCUMSTANCES PREVAILING DURING THE RIP 

(49) 

In accordance with Article 11(3) of the basic Regulation, it was examined whether the 
circumstances  on  the  basis  of  which  the  current  dumping  margin  was  based  have 
changed and whether such change was of a lasting nature. 

(50)  There  were  no  indications  that  the  level  of  the  normal  value  or  the  export  price 
established for the applicant in the current investigation could not be considered of a 
lasting nature. Although it could be argued that the evolution of the prices of natural 
gas as the main raw material could have a significant influence on the normal value, it 
was considered that the effect of a price increase would affect all actors on the market 
and therefore have an impact on both the normal value and the export price.  

(51)  The export price of the applicant to the United States of America, the applicant's major 
export  market,  during  the  RIP  was  found  to  be similar  to  that  of  its  exports  to  other 
countries. 

(52)  Therefore,  there  are  reasons  to  consider  that  the  dumping  margin  found  is  based  on 

changed circumstances of a lasting nature. 

(53) 

(54) 

In addition, the present review did not reveal any indication or evidence that the basis 
on which the injury elimination level was established during the original investigation 
will significantly change in the foreseeable future.  

In  this  regard,  it  is  noted  that  although  the  circumstances  on  the  basis  of  which  the 
determination  of  dumping  was  based  have  changed  since  the  imposition  of  the 
definitive  duties,  which  resulted  in  a  higher  dumping  margin  during  the  RIP  as 
compared  to  the  original  IP,  and  although  there  are  reasons  to  consider  that  the 
dumping margin found is based on changed circumstances of a lasting nature, the level 
of the anti-dumping duty in force should remain the same. Indeed, as mentioned below 

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in recitals (55) and (56), the definitive anti-dumping duties were imposed at the level 
of the injury elimination level as found during the original investigation. 

D. TERMINATION OF THE REVIEW 

(55) 

It  is  recalled  that,  in  accordance  with  Article  9(4)  of  the  basic  Regulation  and  as 
outlined in recital (49) of Council Regulation (EC) No 1995/2000, the definitive duty 
in  the  original  investigation  was  established  at  the  level  of  the  injury  margin  found, 
which was lower than the dumping margin because it was found that such lesser duty 
would be adequate to remove the injury to the Community industry. In the light of the 
foregoing,  the  duty  established  in  this  review  should  not  be  higher  than  the  injury 
margin established in the original investigation.  

(56)  No individual injury margin can be established in this partial interim review, since it is 
limited to the examination of dumping as far as the applicant is concerned. Therefore, 
the  dumping  margin  established  in  the  present  review  was  compared  to  the  injury 
margin as established in the original investigation. Since the latter was lower than the 
dumping margin found in the present investigation, this review should be terminated 
without amending the anti-dumping measures in force.  

E. UNDERTAKINGS 

(57)  The  applicant  expressed  an  interest  in  offering  an  undertaking  but  failed  to  submit  a 
sufficiently substantiated undertaking offer within the deadlines set in Article 8(2) of 
the  basic  Regulation.  Consequently,  no  undertaking  offer  could  be  accepted  by  the 
Commission. However, it is considered that the complexity of several issues, namely 
(1) the volatility of the price of the product concerned which would require some form 
of  indexation  of  minimum  prices,  while  at  the  same  time  the  volatility  is  not 
sufficiently explained by the key cost driver; and (2) the particular market situation for 
the product concerned (inter alia, that there were no imports from the exporter subject 
to  this  review  during  the  RIP)  points  to  the  need  to  further  consider  whether  an 
undertaking combining an indexed minimum price and a quantitative ceiling would be 
workable.  

(58)  As  mentioned  above,  due  to  this  complexity,  the  applicant  could  not  formulate  an 
acceptable  undertaking  offer  within  the  statutory  deadline.  In  view  of  the  above,  the 
Council  considers  that  the  applicant  should  exceptionally  be  allowed  to  complete  its 
undertaking  offer  beyond  the  above-mentioned  deadline  but  within  10  calendar  days 
from entry into force of this regulation. 

F. DISCLOSURE 

(59) 

Interested parties were informed of the essential facts and considerations on the basis of 
which it was intended to terminate the present review and to maintain the existing anti-
dumping  duty  on  imports  of  the  product  concerned  produced  by  the  applicant.  All 
parties were given an opportunity to comment. Their comments were taken into account 
where warranted and substantiated by evidence. 

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HAS ADOPTED THIS REGULATION: 

Sole Article 

The partial interim review of the anti-dumping measures applicable to imports of mixtures of 
urea  and  ammonium  nitrate  in  aqueous  or  ammoniacal  solution  originating  in  Russia, 
currently  classifiable  within  CN  code  3102  80  00,  initiated  pursuant  to  Article  11(3)  of 
Council Regulation (EC) No 384/96, is hereby terminated without amending the measures in 
force.  

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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