Proposal for a COUNCIL REGULATION amending Annex I to Regulation (EEC) No 2658/87 on the tariff and statistical nomenclature and on the Common Customs Tariff
Date: 2022-07-19
Institutions: Directorate-General for Trade and Economic Security, European Commission
Subjects: CCT duties, Combined Nomenclature, chemical fertiliser, import (EU), specification of tariff heading, suspension of customs duties, third country

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   EUROPEAN COMMISSION  Brussels, 19.7.2022  COM(2022) 359 final 2022/0226 (NLE)  Proposal for a COUNCIL REGULATION amending Annex I to Regulation (EEC) No 2658/87 on the tariff and statistical nomenclature and on the Common Customs Tariff  
 
EXPLANATORY MEMORANDUM 

1. 

• 

CONTEXT OF THE PROPOSAL 

Reasons for and objectives of the proposal 

The  purpose  of  the  attached  proposal  for  a  Regulation  is  the  temporary  suspension  of  the 
common customs tariff duties  referred to  in  Article 56(2), point (c), of  Regulation  (EU) No 
952/2013  on  goods  used  to  produce  nitrogen  fertilisers  currently  classified  under  the 
Combined Nomenclature (CN) sub-headings 2814 10 and 3102 10. 

The European Union (EU) market for certain nitrogen fertiliser inputs depends considerably 
on imports from third countries. In 2021, the EU imported 2,9 million tonnes of ammonia and 
4,7 million tonnes of urea to produce nitrogen fertilisers. The prices for those products have 
increased  substantially  in  2021  and  have  further  risen  following  the  Russian  invasion  of 
Ukraine. 

In  order  to  alleviate  costs  for  the  EU  fertilisers  producers,  and  thereby  reduce  costs  for  EU 
farmers and contribute to the appropriate supply of food produced in the EU, it is appropriate 
to take the temporary trade-liberalising measures of this proposal. In order to increase stability 
of supply, it is also appropriate to enlarge the geographical scope of non-preferential origins, 
currently concentrated on Russia, to encompass other countries. In effect, and in particular at 
a time of scarcity on the international markets of nitrogen fertilisers, the existence of tariffs on 
the  importation  into  the  EU  of  intermediate  inputs  such  as  ammonia  and  urea  constitutes  a 
disincentive to the supply of the EU market compared to other world markets which have no 
such import tariffs. Considering that traded goods in this category are primarily commodities, 
this tariff differential hinders efforts for the diversification of EU imports. 

Furthermore,  in  its  Communication  of  23  March  2022  to  the  European  Parliament  and  the 
Council on “Safeguarding food security  and reinforcing the  resilience of food systems”, the 
Commission  notes that already before the  Russian invasion of Ukraine, commodity markets 
were  witnessing  a  significant  price  surge,  which  agricultural  markets  felt  through  the 
increases in energy and fertiliser costs, and a consequent increase in farm product prices. The 
invasion  of  Ukraine  and  a  global  commodity  price  hike  have  further  driven  up  prices  in 
agricultural product markets and are exposing the vulnerabilities of the Union’s food system 
which  is  partially  reliant  on  imports  of  fertilisers.  The  Communication  stresses  that,  in  the 
short  term,  the  cost  and  availability  of  mineral  fertilisers  must  be  a  priority,  pending  the 
transition  to  the  use  of  sustainable  types  of  fertilisers  or  methods  of  fertilising.  During  that 
period,  the  fertiliser  industry  in  the  EU  must  be  able  to  access  the  necessary  imports, 
including inputs to produce fertilisers within the EU itself.  

Of the three main fertiliser types used by farmers, nitrogen-based fertiliser is the one subject 
to  common  customs  tariff  duties  applicable  to  intermediate  inputs  that  are  key  to  its 
production, as opposite to potash and phosphorus, where key inputs are subject already to a 
zero-duty common customs tariff rate. Nitrogen based fertilisers are also the widest consumed 
fertilisers type in the EU, and also the one where prices have increased the most since 2021. 
Therefore, the proposed measures focus on inputs for nitrogen-based fertilisers. 

• 

Consistency with existing policy provisions in the policy area  

Currently, third countries that benefit from duty-free preferential access to the Union market 
pursuant to Free Trade Agreements are the main suppliers of these goods to the EU market. 
Nevertheless,  the  EU  imports  a  large  volume  of  inputs  for  nitrogen  fertilisers  originating  in 

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countries subject to the Common Customs Tariff, with tariff rates currently ranging between 
5,5  and  6,5%.  To  increase  stability  of  supply,  it  is  appropriate  to  temporarily  enlarge  the 
geographical  scope  of  supplying  countries  beyond  those  who  benefit  from  a  free-trade 
agreement,  as  supply  is  currently  concentrated  in  a  relatively  small  number  of  preferential 
suppliers.  However,  unlike  for  access  via  preferential  trade  agreements,  the  proposed 
measures for tariff suspensions under this proposal are temporary.  

• 

Consistency with other Union policies 

The  trade-liberalising  measures  that  are  contained  in  this  proposal  aim  at  ensuring  that  the 
temporary  suspension  of  the  Union’s  common  customs  tariff  is  conducted  in  the  context  of 
the principles and objectives of the Union’s external action set out in Article 21 TEU and that 
different areas of external action of the Union, as well as its external action and other Union 
policies, be consistent with another. It is therefore appropriate to exclude products originating 
in Russia and Belarus from the tariff reduction, in line with the restrictive measures taken by 
the Union against these countries following Russia’s aggression against Ukraine.  

2. 

• 

LEGAL BASIS, SUBSIDIARITY AND PROPORTIONALITY 

Legal basis 

The legal basis of this regulation proposal is Article 31 of the Treaty on the Functioning of the 
European Union (TFEU). 

• 

Subsidiarity (for non-exclusive competence) 

The  subsidiarity  principle  does  not  apply,  as  the  proposal  falls  under  the  exclusive 
competence of the Union. 

• 

Proportionality 

The  proposal  complies  with  the  proportionality  principle  given  that  it  balances  the 
commercial interest of economic operators (producers of nitrogen fertilisers and consumers). 
The proposal foresees suspending the Common Customs Tariff duties only for the tariff lines 
of  fertiliser  inputs  for  which  the  EU  reliance  on  imports  is  the  highest,  and  where  price 
increases  have  been  most  extreme.  In  addition,  the  suspension  will  apply  for  a  temporary 
period only. The suspension does not limit anybody’s fundamental rights; on the contrary, it 
temporarily removes a duty payment obligation. 

• 

Choice of the instrument 

This  proposal  is  in  accordance  with  Article  207(2)  TFEU,  which  envisages  common 
commercial  policy  measures.  By  virtue  of  Article  31  of  the  TFEU,  the  Council  fixes  the 
Common  Customs  Tariff  duties,  acting  by  qualified  majority  on  the  basis  of  a  Commission 
proposal. 

3. 

• 

RESULTS 
CONSULTATIONS AND IMPACT ASSESSMENTS 

EX-POST 

EVALUATIONS, 

OF 

STAKEHOLDER 

Ex-post evaluations/fitness checks of existing legislation 

Not applicable.  

• 

Stakeholder consultations  

Not applicable.  

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• 

Collection and use of expertise  

Not applicable.  

• 

Impact assessment  

In view of the significant and sudden price increase of the inputs from production of nitrogen 
fertilisers, aggravated by the emergency situation that Russia’s – the second largest supplier 
of nitrogen fertilisers to the EU – invasion of Ukraine provoked in the market of fertilisers, it 
is  important  for  the  Regulation  to  enter  into  force  as  soon  as  possible  in  order  to  foster  the 
diversification of supplies for the inputs necessary for fertiliser production, and a reduction of 
production  costs,  ahead  of  the  forthcoming  planting/seeding  season  in  the  autumn  2022. 
Therefore,  no  impact  assessment  was  carried  out  for  the  measure  at  hand.  However,  it  is 
expected that the proposed measure alters the profile of suppliers of nitrogen fertilisers inputs 
to the EU and helps diversify away from Russia.  

• 

Regulatory fitness and simplification  

The measure does not increase the regulatory burden of companies.  

• 

Fundamental rights  

Not applicable. 

4. 

BUDGETARY IMPLICATIONS 

This proposal has no financial impact on expenditure, but has a financial impact on revenue. 
Uncollected customs duties corresponding to the suspension will amount approximately to 15 
Mio € per year when the measure is of application for a full year. The duration of the measure 
is a period of just over two years, until end of 2024. 

The negative effect on the budget’s traditional own resources is 11,25 Mio € (i.e. 75 % of the 
total). The legislative financial statement sets out the budgetary implications of the proposal 
in greater detail. 

The  loss  of  revenue  in  traditional  own  resources  will  be  compensated  by  Member  States’ 
Gross National Income (GNI) based on resource contributions. 

5. 

• 

OTHER ELEMENTS 

Implementation plans and monitoring, evaluation and reporting arrangements 

On-line  reporting  on  the  evolution  of  EU  imports  of  inputs  for  nitrogen-based  fertilisers  is 
available via dedicated websites of the European Commission (Eurostat). 

• 

Explanatory documents (for directives) 

Not applicable.  

• 

Detailed explanation of the specific provisions of the proposal 

In view of the extraordinary situation in the Union market for fertilisers, the measure aims at 
increasing the trade flows, and fostering diversification, concerning imports of inputs for the 
production  of  nitrogen-based  fertilisers  by  temporarily  suspending  import  duties  applied  to 
these products. 

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2022/0226 (NLE) 

Proposal for a 

COUNCIL REGULATION 

amending Annex I to Regulation (EEC) No 2658/87 on the tariff and statistical 
nomenclature and on the Common Customs Tariff 

THE COUNCIL OF THE EUROPEAN UNION, 

Having  regard  to  the  Treaty  on  the  Functioning  of  the  European  Union,  and  in  particular 
Article 31 thereof, 

Having regard to the proposal from the European Commission, 

Whereas: 

(1) 

(2) 

(3) 

(4) 

The  European  Union  (EU)  market  for  certain  nitrogen  fertiliser  inputs  depends 
considerably  on  imports  from  third  countries.  In  2021,  the  EU  imported  2,9  million 
tonnes of ammonia and 4,7 million tonnes of urea to produce nitrogen fertilisers. The 
prices  for those products have increased substantially in  2021 and have further  risen 
during the current year. 

Currently, a significant part of these inputs for nitrogen fertilisers is imported into the 
Union from third countries that benefit from preferential access to the Union market, 
and  thus  the  imports  are  duty  free.  Notwithstanding  this,  the  EU  imports  a  large 
volume  of  inputs  for  nitrogen  fertilisers  originating  in  countries  subject  to  the 
Common Customs Tariff, with tariff rates currently ranging between 5,5 and 6,5%.  

In its Communication of 23 March 2022 to the European Parliament and the Council 
on  “Safeguarding  food  security  and  reinforcing  the  resilience  of  food  systems”,  the 
Commission  notes  that  already  before  the  Russian  invasion  of  Ukraine,  commodity 
markets  were  witnessing  a  significant  price  surge,  which  agricultural  markets  felt 
through the increases in energy and fertiliser costs, and a consequent increase in farm 
prices.  The  Commission  notes  that  the  invasion  of  Ukraine  and  a  global  commodity 
price  boom  have  further  driven  up  prices  in  agricultural  product  markets  and  are 
exposing  the  vulnerabilities  of  the  Union’s  food  system  which  is  partially  reliant  on 
imports  of  fertilisers.  This  increases  the  costs  for  producers  and  affects  the  price  of 
food, raising concerns as regards the purchasing power of consumers, and the income 
of EU farmers.  

The Communication stresses that, in the short term, the cost and availability of mineral 
fertilisers must be a priority, pending the transition to the use of sustainable types of 
fertilisers or methods of fertilising. During that period, the fertiliser industry in the EU 
must  be  able  to  access  the  necessary  imports,  including  inputs  to  produce  fertilisers 
within  the  EU  itself.  The  Communication  also  highlights  that  fertiliser  prices  and 
supplies for farmers will be monitored to ensure that the prospects for EU harvests are 
not jeopardised. 

(5) 

In light of the foregoing, it is appropriate to take action to reduce the costs faced by the 
EU  producers  of  fertilisers  when  importing  inputs  necessary  for  the  production  of 
nitrogen fertilisers.  

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(6)  Moreover,  at  a  time  of  scarcity  on  the  international  markets  of  nitrogen  fertilisers, 
tariffs on the importation into the EU of intermediate inputs such as ammonia and urea 
constitute  a  disincentive  to  the  supply  of  the  EU  market  compared  to  other  world 
markets which have no import tariffs. This tariff differential also hinders efforts for the 
diversification of EU imports.  

(7) 

(8) 

(9) 

It  is  therefore  appropriate  to  temporarily  suspend  the  Common  Customs  Tariff  rates 
duties  referred  to  in  Article  56(2),  point  (c),  of  Regulation  (EU)  No  952/2013  for 
certain  nitrogen  fertilisers  inputs.  The  temporary  measure  applies  for  the  period  of 
time  for  which  the  price  disruption  on  energy  and  nitrogen  fertilisers  markets  is 
expected to subsist, which is expected to last until end of 2024.  

At the same time, in accordance with Article 21(3) of the Treaty on European Union, 
the Union is to ensure consistency between the different areas of its external action as 
well as between its external action and other Union policies.  

The  situation  in  the  relations  between  the  Union  and  the  Russian  Federation  has 
developed  very  negatively  over  the  past  years,  with  a  particular  deterioration  during 
the recent months in terms of the Russian Federation’s disregard for international law 
and in particular its unprovoked and unjustified invasion of Ukraine. 

(10)  Since July 2014, the Union has progressively imposed restrictive measures against the 
Russian  Federation.  In  its  conclusions  of  24  February  2022,  the  European  Council 
stated that Russia’s unprovoked and unjustified military aggression against Ukraine is 
grossly  violating  international  law  and  the  principles  of  the  UN  Charter  and  is 
undermining European and global security and stability. 

(11)  Most  recently,  on  3  June  2022,  the  Council  adopted  a  sixth  package  of  sanctions1 
against the Russian Federation over its continuous war of aggression against Ukraine 
and the reported atrocities committed by Russian armed forces in Ukraine. 

(12)  Furthermore,  while  the  Russian  Federation  is  a  member  of  the  World  Trade 
Organization,  the  Union  is  relieved,  by  virtue  of  the  exceptions  that  apply  under  the 
Agreement Establishing the World Trade Organization, and in particular Article XXI 
of  the  GATT  1994,  from  the  obligation  to  accord  to  products  imported  from  the 
Russian  Federation  the  advantages  granted  to  like  products  imported  from  other 
countries (most-favoured-nation treatment).  

(13) 

It would therefore not be appropriate to allow imports from the Russian Federation to 
enjoy  duty-free  and  most-favoured-nation  treatment  with  regard  to  the  products 
covered by this Regulation. 

(14)  The situation between the Union and Belarus has also deteriorated over the past years, 
because  of  the  regime’s  disregard  for  international  law,  fundamental  freedoms  and 
human  rights.  In  addition,  Belarus  has  supported  the  Russian  military  aggression 
against Ukraine from its very beginning, inter alia by allowing Russia to fire ballistic 
missiles  from  the  Belarusian  territory,  enabling  transportation  of  Russian  military 
personnel  and  heavy  weapons,  tanks,  and  military  transporters,  allowing  Russian 
military  aircraft  to  fly  over  Belarusian  airspace  into  Ukraine,  providing  refuelling 
points, and storing Russian weapons and military equipment in Belarus. 

(15)  Since October 2020, the Union has progressively imposed restrictive measures against 
Belarus. On 2 December 2021, the Council adopted a fifth package of sanctions over 
continued  human  rights  abuses  and  the  instrumentalisation  of  migrants.  Further 

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packages  of  sanctions  were  adopted  on  24  February,  2  March,  9  March  and  3  June 
2022,  in  view  of  Belarus’  involvement  in  the  unjustified  and  unprovoked  Russian 
military  aggression  against  Ukraine.  Furthermore,  Belarus  is  not  a  member  of  the 
World  Trade  Organization.  Therefore,  the  Union  is  not  obliged,  by  virtue  of  the 
Agreement  Establishing  the  World  Trade  Organization,  to  accord  to  products  from 
Belarus  most-favoured-nation  treatment.  In  addition,  trade  agreements  allow  actions 
justified on the basis of applicable exception clauses, in particular security exceptions, 
as already pointed out. 

(16) 

In the light of the context above, the exclusion of Russia and Belarus from the scope 
of  the  autonomous  tariff  suspensions  laid  out  in  this  Regulation  is  appropriate  and 
permitted,  in  application  of  the  General  Rules  concerning  duties  of  Annex  I  to 
Regulation  (EEC)  No  2658/87  on  the  tariff  and  statistical  nomenclature  and  on  the 
Common Customs Tariff, and in particular Section 1, part B, paragraph 1 thereof. 

(17)  Accordingly,  imports  of  inputs  for  nitrogen  fertilisers  originating  in  Russia  and 
Belarus should not be subject to the duty suspension. Instead, imports of the products 
concerned by this Regulation from Russia and Belarus should continue to be subject to 
the import duty to which they were subject beforehand. 

HAS ADOPTED THIS REGULATION: 

In  Annex  1  to  Regulation  (EEC)  No  2658/87,  the  text  for  CN  code  2814  10  00  in 

1. 
column 3 is replaced by the following: 

Article 1 

‘5,5 (*) 

_________________ 

(*)  Customs  duty  autonomously  suspended,  until  31  December  2024,  except  for  Russia  and 
Belarus where rate of 5,5% applies, pursuant to Council Regulation 2022/XXXX [number of 
this Regulation].’ 

In Annex 1 to Regulation (EEC) No 2658/87, the text for CN codes 3102 10  10 and 

2. 
3102 10 90 in column 3 is replaced by the following: 

‘6,5 (*) 

_________________ 

(*)  Customs  duty  autonomously  suspended,  until  31  December  2024,  except  for  Russia  and 
Belarus where rate of 6,5% applies, pursuant to Council Regulation 2022/XXXX [number of 
this Regulation].’ 

Article 2 

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

It shall apply until 31 December 2024.  

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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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LEGISLATIVE FINANCIAL STATEMENT 

NAME OF THE PROPOSAL: 

Proposal for a Council Regulation amending Annex I to Regulation (EEC) No 2658/87 on the 
Tariff and Statistical Nomenclature and on the Common Customs Tariff. 

BUDGET LINES: 

Chapter and Article: Chapter 12, Article 120 

Amount budgeted for the year 2022: 17 912 606 159 

FINANCIAL IMPACT: 

 

Proposal has no financial implications 

Proposal has no financial impact on expenditure but has a financial impact on 

X 
the traditional own resources revenue, for the following reasons:  

In 2021, the total  value  of imports of CN codes 2814 10 00 amounted to  1,3 billion €. The 
conventional rate of duty for this CN code is  5,5%. Most of these imports (68%) were duty 
free  as  a  result  of  the  implementation  of  Free  Trade  Agreements.  Additional  29%  were 
imports  from  Russia,  that  will  not  be  subject  to  tariff  reduction.  The  estimated  uncollected 
duties are therefore 2,1 million € (1,3 bio € x 3% import share x 5,5%) per year. 

In 2021, the total value of imports of CN codes 3102 10 10 and 3102 10 90 amounted to 1,8 
billion  €.  The  conventional  rate  of  duty  for  this  CN  code  is  6,5%.  Most  of  these  imports 
(65%) were duty free as a result of the implementation of Free Trade Agreements. Additional 
24% were imports from Russia and Belarus, that will not be subject to tariff reduction.  The 
estimated  uncollected  duties  are  therefore  12,9  million  €  (1,8  bio  €  x  11%  import  share  x 
6,5%) per year.  

On the basis of the above, the impact on the loss of revenue for the EU budget resulting from 
this Regulation is estimated at 11,25 Mio € per year [(12,9 mio € + 2,1 mio € = 15 mio € gross 
amount, including collection costs) x 0,75]. 

For  2022  the  impact  on  the  loss  of  traditional  own  resources  revenue  for  the  EU  budget  is 
estimated as one third of the above amount. i.e. 3,8 million €.  

The  loss  of  revenue  in  traditional  own  resources  will  be  compensated  by  Member  States 
Gross National Income (GNI) based on resource contributions. 

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