CELEX: 51998PC0148
Language: en
Date: 1998-03-12
Title: Proposal for a Council Regulation (EC) amending Regulation (EC) No 2022/95 imposing a definitive anti- dumping duty on imports of ammonium nitrate originating in Russia

COMMISSION OF THE EUROPEAN COMMUNITIES
                                               Brussels, 12.03 1998
                                               COM(1998) 148 final
                                Proposal for a
                      COUNCIL REGULATION (EC)
amending Regulation (EC) No 2022/95 imposing a definitive anti-dumping duty on
             imports of ammonium nitrate originating in Russia
                       (presented by the Commission)
 ---pagebreak---  ---pagebreak---                                EXPLANATORY MEMORANDUM
The Council, by Regulation (EC) No 2022/95', imposed a definitive anti-dumping duty
on imports of ammonium nitrate originating in Russia.
The Commission         reopened    the   investigation concerning   such  imports   on
29 May 19972, pursuant to Article 12 of Council Regulation (EC) No 384/96-\
subsequent to the lodging of a complaint by the European Fertilizer Manufacturers
Association on 14 April 1997.
The findings of the review investigation show that the definitive duty imposed did not
lead to sufficient movement in resale prices in the Community within the meaning of
Article 12 (2) of Regulation (EC) No 384/96. Following the imposition of the duty, it
was found that the margin of dumping had increased. It is proposed, therefore, to
change the anti-dumping measure from the minimum import price currently applicable
to a specific duty per tonne of ECU 26.3, in line with the new findings on export
prices.
The Advisory Committee was consulted on 14 January 1998 and declared itself
unanimously in favour. The Legal Service, the Directorate-General for Industry and
the Directorate-General for Customs and Indirect Taxation have been consulted and
have also given their approval in this respect
 1
    OJNoL 198. 23.8.1995, p. 1.
2
    OJ No C 162. 29.5.1997, p. 5.
 1
    OJ No L 56, 6.3.19%. p. 1.
                                              1
 ---pagebreak---                            COUNCIL REGULATION (EC) No               /98
                                          of          1998
    amending Regulation (EC) No 2022/95 imposing a definitive anti-dumping duty on
                       imports of 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 Community0 \ as
  amended by Council Regulation (EC) No 2331/96 of 2 December 1996(2), and in particular
  Article 12 thereof,
  Having regard to the proposal submitted by the Commission after consulting the Advisory
  Committee,
  Whereas:
                                            A. PROCEDURE
     1. Previous measures
(1) In May 1994, by Commission Decision 94/293/EC , anti-dumping measures were
     adopted with regard to imports of ammonium nitrate originating in Lithuania and Russia,
     following a regional anti-dumping proceeding concerning imports into the United
     Kingdom. Measures were in the form of the acceptance of undertakings which were
     intended to limit exports from each country to the United Kingdom to 100 000 tonnes per
     annum. The undertaking accepted from the Russian authorities was, however, breached
     within the first year of its operation.
  1
      OJ No L 56, 6.3.1996, p. 1.
  2
      OJ No L 317, 6.12.1996, p. 1.
  3
      OJ No L 129, 21.5.1994, p. 24.
                                                  y\ £*.
 ---pagebreak---  (2) In June 1994, a Community-wide anti-dumping investigation concerning imports of
     ammonium nitrate originating in Lithuania and Russia was initiated(4) subsequent to a
     complaint lodged by the European Fertilizer Manufacturers Association (EFMA).
      In August 1995 the Council, by Regulation (EC) No 2022/95(5), imposed a definitive anti-
     dumping duty, in the form of a variable duty, on imports of ammonium nitrate
     originating in Russia. The amount of duty was set at the difference between a minimum
     import price of ECU 102.9 per tonne net of product and the net cif price, Community
     frontier before customs clearance, where the latter was lower. The Commission
     simultaneously terminated the regional anti-dumping proceeding in respect of imports of
     ammonium nitrate originating in Russia(6).
     For imports originating in Lithuania, the Community-wide proceeding was terminated
     without measures in view of the findings of the investigation concerning the causation of
     injury(7).  However, the undertaking concerning imports into the United Kingdom
    originating in Lithuania, accepted in the framework of the regional anti-dumping
    proceeding, remained in place.
    The investigation that led to the imposition of the Community-wide measures is
    hereinafter referred to as 'the original investigation'. The investigation period of the
    original investigation was from 1 April 1993 to 31 March 1994.
    2. Request for a reopening of the investigation
(3) In April 1997, EFMA lodged a request pursuant to Article 12 of Council Regulation (EC)
    No 384/96 (hereinafter referred to as 'the basic Regulation') to reopen the investigation
     into imports of ammonium nitrate originating in Russia with a view to examine whether
    the measures had had an effect on resale prices or subsequent selling prices.
    The request was lodged on behalf of Community producers whose collective output of
    ammonium nitrate constitutes a major proportion, as defined by Article 5 (4) of the basic
  4
       OJ No C 158, 9.6.1994, p. 3.
  5
       OJ No L 198, 23.8.1995, p. 1.
  6
       OJ No L 198,23.8.1995, p. 29.
  7
       OJ No L 198, 23.8.1995, p. 27.
 ---pagebreak---       Regulation, of the total Community production of the product concerned, that is, by the
      Community industry in the proceeding.
  (4) It was alleged that the imposition of anti-dumping duties on imports of ammonium nitrate
      originating in Russia had led to no movement, or insufficient movement, in resale prices
      or subsequent selling prices in the Community.         The information submitted by the
      Community industry contained prima facie evidence to justify the reopening of the
      investigation, consisting of a comparison of the resale price per tonne which should have
      been expected following the imposition of measures (calculated by adding to the
      minimum import price set by Council Regulation (EC) No 2022/95 all costs incurred
      between import and resale) with actual resale prices per tonne in two Member States
      (France and the United Kingdom), which were alleged to account for 82% of the
      consumption of ammonium nitrate in the Community.
      3. Reopening of the investigation
(5)   The evidence submitted in the request was considered sufficient.        On 29 May 1997,
      therefore, the Commission announced by a notice published in the Official Journal of the
      European Communities' the reopening of the investigation, pursuant to Article 12 of the
      basic Regulation, concerning the anti-dumping measures applicable to imports of
      ammonium nitrate originating in Russia and commenced the reinvestigation.
(6)   The       Commission         officially   advised     the     producers/exporters     and
      importers/traders/distributors known to be concerned, the representatives of the exporting
      country and the Community producers of the reopening of the investigation.. Interested
      parties were given the opportunity to make their views known in writing and to request a
      hearing.    All parties who so requested were granted hearings.          Written and oral
      submissions were also received from certain importers/traders/distributors and from
      EFMA and certain of its constituent members.           Questionnaires were sent by the
      Commission directly to all producers/exporters and importers/traders/distributors known
      to be concerned.
    8
        OJNoC 162,29.5.1997, p. 5.
 ---pagebreak---      (a) Producers/exporters in the country of origin and their related companies
    No replies to the questionnaire were received within the time limit set.             One
    producer/exporter replied after the expiry of the time limit, but in a manner which could
    only be considered insufficient. This company was then given the opportunity to rectify
    the deficiencies in its response, which it failed to do. The company was therefore
    informed that it would be considered as non-cooperating and was given the opportunity
    to comment on this decision, in accordance with Article 18 (4) of the basic Regulation.
    The company replied, outside the deadline, that it had supplied non-confidential
    information which should be used by the Commission. The non-confidential information
    already supplied was, however, clearly insufficient           for the purposes of the
    reinvestigation.
    (b) Importers/traders/distributors in the Community
    Nine unrelated importers/traders/distributors made themselves known to the Commission
    and responded to the questionnaire. Of these, two subsequently did not cooperate and
    were therefore excluded from the reinvestigation conducted.         Both companies were
    informed of this decision and were given an opportunity to comment, in accordance with
    Article 18 (4) of the basic Regulation.
    The Commission carried out investigation visits at the premises of the following
    companies :
    - Unifert France, SA, France
    - SHB Trading Ltd., United Kingdom
    - ConAgra Resources Europe Ltd., United Kingdom
    - Common Market Fertilizers, SA, Belgium
    The three remaining cooperating importers/traders/distributors were not visited by the
    Commission but appropriate account was taken of the information provided in their
    replies.
(7) The reinvestigation covered the period from 1 April 1996 to 31 March 1997 (hereinafter
    referred to as 'the period of reinvestigation').
 ---pagebreak--- (8) The reinvestigation exceeded the normal time period of six months provided for in
    Article 12 (4) of the basic Regulation owing to the Commission being hampered in its
    efforts to gather information by the marked lack of cooperation.
                               B. PRODUCT UNDER CONSIDERATION
(9)   The product reinvestigated is the same product, originating in Russia, as that concerned
      by the original investigation: i.e. ammonium nitrate, which is a fertiliser produced in
      prill or granular form, currently classifiable within CN codes 3102 30 90 (ammonium
      nitrate, other than in aqueous solution) and 3102 40 90 (mixtures of ammonium nitrate
      with calcium carbonate or other inorganic non-fertilising substances with a nitrogen
      content exceeding 28% by weight).
                                    C. THE REINVESTIGATION
       1. Cooperation
(10) No producer/exporter of ammonium nitrate located in Russia - or related
      importer/trader/distributor located within or outside the Community - cooperated with
      the reinvestigation. In addition, as indicated in recital (11) below, little cooperation was
      received from unrelated importers/traders/distributors located within or outside the
      Community.
      Recourse was therefore made to facts available in accordance with Article 18 of the
      basic Regulation.      Information received from customs authorities in the United
      Kingdom,         from       published      trade      journals,      from        cooperating
      importers/traders/distributors and from the Community industry was used, where
      appropriate.
(11) Only 20% of imports into the Community of ammonium nitrate originating in Russia
      during the period of reinvestigation was accounted for by the purchases of cooperating
      companies. Furthermore, a number of cooperating companies were related to non-
      cooperators also involved in the trade of ammonium nitrate originating in Russia.
      Despite the fact that this meant the Commission could not be wholly confident as to the
      completeness of the information supplied, it was nonetheless not disregarded, where
      relevant, as it was considered that the deficiencies were not such as to cause undue
                                                     5
 ---pagebreak---       difficulty in arriving at a reasonably accurate finding, in accordance with Article 18 (3)
      of the basic Regulation. In this respect, costs between import and resale verified on-
      the-spot at cooperating companies considered to have provided the most detailed
      information were used to calculate the resale price level which could reasonably have
      been expected for the product concerned after the adoption of measures.
      2. Movement of resale prices in the Community
(12) Pursuant to Article 12 (1) and (2) of the basic Regulation, it was determined whether,
      following the imposition of definitive anti-dumping duties in 1995, the expected
     movement in resale prices in the Community had occurred. In particular, the resale
     price to the first independent buyer which should have been expected during the period
     of reinvestigation (the 'benchmark resale price') was compared with the resale price
     actually found for the same period (the 'actual resale price').
     (a) Calculation of the benchmark resale price
(13) In order to calculate the benchmark resale price it was considered appropriate to add to
     the minimum import price established pursuant to the original investigation all costs
     incurred between import and resale plus an amount for profit.
     However, in the absence of any more suitable information, a distinction was made
     between      costs    associated   with    imports    accounted    for   by   cooperating
     importers/traders/distributors - for which the costs incurred between import and resale
     were verified on-the-spot - and those associated with imports accounted for by non-
     cooperators - whose costs were established on the basis of the facts available, in
     accordance with Article 18 of the basic Regulation.
(14) In order to calculate the costs incurred between import and resale for cooperating
     companies, appropriate amounts for customs duty, handling and ancillary costs, selling,
     general and administrative expenses (including credit costs) and profit were taken into
     consideration, as verified on-the-spot.
     One importer argued, after disclosure of the findings of the reinvestigation, that the
     profitability used did not reflect actual profitability verified on-the-spot. The rate of
 ---pagebreak---       profitability used was reviewed and, after consideration, an appropriate adjustment was
      made.
(15) For non-cooperators, appropriate amounts for customs duty, handling and ancillary
     costs, product losses, selling, general and administrative expenses (including credit
     costs) and profit were taken into consideration, taking the highest costs found, by
     Member State, for cooperating companies. Due account was taken of the fact that
     imports made into the United Kingdom accounted for by non-cooperating companies
     were primarily made in bulk, as indicated by evidence provided by customs authorities.
     In this respect, the costs of bags and bagging were also included in the calculation of
     costs incurred between import and resale for imports accounted for by non-cooperating
     companies made into the United Kingdom. The amount for profit was determined on
     the basis of information contained in the request for a reinvestigation.
(16) Weighted average costs incurred between import and resale and profit were added to the
     minimum import price established pursuant to the original investigation (established on
     a cif Community frontier basis duty unpaid) in order to establish the Community
     benchmark resale price, denominated in ECU, for the period of reinvestigation.
     (b) Actual resale price after the imposition of the measures
(17) The actual resale price to the first independent buyer for all imports into the Community
     of ammonium nitrate originating in Russia during the period of reinvestigation was then
     established.    A distinction was made between the actual resale price for imports
     accounted for by cooperating importers/traders/distributors and that calculated for
     imports accounted for by non-cooperators.
(18) For imports accounted for by cooperating companies, the actual resale price was
     calculated on the basis of information verified on-the-spot.
(19) For imports accounted for by non-cooperators, the actual resale price was calculated, on
     the basis of the facts available, in accordance with Article 18 of the basic Regulation, on
     a monthly basis for the period of reinvestigation, by reference to market prices
     published in trade journals, on a Member State by Member State basis. In the absence
     of any more suitable information, in order not to reward non-cooperation and in view of
     the fact that the market prices referred to were those for all imported ammonium nitrate
 ---pagebreak---      whilst, according to information received during the course of the reinvestigation,
     Russian ammonium nitrate trades at a lower price than other imported ammonium
     nitrate, the lowest market price published therein was taken.
(20) Finally, a single weighted average actual resale price, denominated in ECU, was
     calculated for all imports of the product concerned (both made in bulk and bagged) for
     the period of reinvestigation.
     (c) Insufficient movement of resale prices
(21) The difference between the actual resale price and the benchmark resale price was then
     calculated in order to determine whether or not there had been sufficient movement in
     resale prices following the imposition of anti-dumping measures.
(22) It was found that the imposition of anti-dumping measures had led to insufficient
     movement in resale prices in the Community. The actual resale price remained below
     the benchmark resale price on a weighted average basis.            This shortfall in price
     movement is expressed below as a percentage of the weighted average actual resale
     price:
                                                    9.0%
     In view of the significant shortfall in the movement of resale prices, it was not
     considered necessary to investigate any further whether the subsequent selling prices in
     the Community had moved sufficiently.
     (d) Other factors affecting the average resale price of the product after imposition of
     the anti-dumping duty
(23) No other arguments were brought forward by interested parties, nor were any other
     factors found during the reinvestigation, explaining why resale prices as indicated
     above did not move to the extent that could reasonably be expected after the imposition
     of the anti-dumping duty.
     Certain importers argued that low resale prices reflected the poor condition of the
     market for ammonium nitrate. Such a situation does not, however, address the issue
     under consideration which is that, for the period of reinvestigation (i.e. one year), resale
 ---pagebreak---      prices did not sufficiently reflect costs incurred and profit realised, had the minimum
     import price been respected.
      (e) Conclusion
(24) The Council concludes that for ammonium nitrate originating in Russia, the anti-
     dumping measures have not led to sufficient movement in resale prices in the
     Community within the meaning of Article 12 (2) of the basic Regulation.
     3. Recalculation of the dumping margin
(25) In accordance with Article 2 of the basic Regulation, a new dumping margin was
     established, as required by Article 12 (2) of that Regulation.
     (a) Normal value
(26) As no producer/exporter claimed a change in normal value had occurred, as provided
     for by Article 12 (5) of the basic Regulation, the normal value as established in the
     original investigation for the analogue country, Poland, was used for the recalculation
     of the dumping margin.
     (b) Reassessed export price
(27) One export price was calculated for all ammonium nitrate originating in Russia
     imported into the Community during the period of reinvestigation.
(28) For imports accounted for by cooperating importers/traders/distributors, export prices
     were calculated, using information verified on-the-spot, on the basis of the price paid or
     payable by these operators.
(29) In the absence of export prices for imports accounted for by non-cooperators it was
     decided to construct such prices in accordance with Article 2 (9) of the basic
     Regulation. In this regard, Eurostat import statistics were not considered a reliable
     basis for establishing such prices in view of the apparent existence of an association or
     compensatory arrangement. This consideration concurs with evidence provided by
     customs authorities in the United Kingdom indicating widespread overstatement of
     export prices by certain non-cooperators. This is also the conclusion drawn from
 ---pagebreak---      information concerning resale invoices in the hands of the Commission which indicates
     a price for resale far below that which would allow an importer to carry on normal
     business, were the minimum import price being respected; in other words, if all costs
     incurred between import and resale were deducted from the resale invoice price to the
     first independent buyer, an import price is reached, Community frontier before customs
     clearance, which is lower than the minimum import price.
     Reliable export prices at the Community frontier were therefore constructed on the
     basis of the price at which the imported product was first resold to an independent
     buyer, established on the basis of facts available in accordance with Article 18 of the
     basic Regulation, i.e. the information referred to in recital (19) above, with adjustments
     made for all costs incurred between importation and resale, including the anti-dumping
     duty payable, plus a reasonable amount for profit.           The amount for profit was
     determined on the basis of information contained in the request for a reopening of the
     reinvestigation, which has been corroborated by other sources.
(30) A weighted average Community frontier export price was then calculated for all
     imports of ammonium nitrate originating in Russia.
     (c) Comparison
(31) A fair comparison was made between the normal value as established in the original
     investigation and the weighted average export price as established above, in accordance
     with Article 2(10) of the basic Regulation.
     (d) Dumping margin
(32) The comparison of normal value with reassessed weighted average export prices
     showed the existence of a higher dumping margin as compared with that found in the
     original investigation. The recalculated weighted average dumping margin, expressed
     as a percentage of the cif price free at the Community frontier, is:
                                                     41.9%
     (e) Conclusion
                                                    10
 ---pagebreak--- (33) As the reinvestigation has shown that the measures in force have led lo msullicicni
     movement in resale prices in the Community and that dumping margins have increased.
     the measures in force shall be amended, in line with the new findings on export prices.
     in accordance with Article 12 (3) of the basic Regulation.
     4. Proposed change of the measures applicable
(34) The measures previously applicable did not have their intended effect upon the resale
     price of ammonium nitrate originating in Russia, due to absorption of the anti-dumping
     measures in force. Actual resale prices for the period of reinvestigation did not reflect
     the costs incurred between the levels of import and resale.
     During the course of the reinvestigation it was considered whether it would be
     appropriate simply to increase the minimum import price to reflect the increased
     dumping margin.
     The very fact, however, that absorption of anti-dumping duties in the form of a
     minimum import price has taken place also means that any increase in the level of the
     minimum import price might be equally ineffective in revising resale prices or
     subsequent selling prices in the Community.
     From the foregoing, it can be seen that the flexibility permitted to the Russian
     producers/exporters by the variable anti-dumping duty hitherto applicable has failed to
     revise prices for ammonium nitrate originating in Russia to the extent that the injurious
     effect of the dumping has not been removed.
(35) It is concluded from the findings of the reinvestigation - and taking into account the
     past history of anti-dumping measures concerning imports of ammonium nitrate
     originating in Russia, which involved the breach of an undertaking in the first year
     following its acceptance by the Commission (see recital (1) above) - that it is also
     prudent to alter the form of measures in force. In view of the possibility of absorption
     of an ad-valorem duty for this seasonal and price-sensitive product, the Council
     considers it appropriate to amend the definitive anti-dumping duty imposed on imports
     of ammonium nitrate originating in Russia from the minimum import price currently in
     force to a specific duty per tonne. This form of anti-dumping measure would be more
                                                  11
 ---pagebreak---      effective in revising resale prices and thus remedying the injurious effect of die
     dumping.
     One importer argued that the problem of absorption of the anti-dumping duty in force
     was confined to imports made in bulk and that, therefore, while the specific duty was
     appropriate for imports made in bulk, the minimum import price should remain in force
     for imports made in bags. After consideration of the merits of this argument it was not
     accepted for the reason that the findings of the reinvestigation indicated that absorption
     of the duties was not confined to those imports made in bulk.
     One producer located in Russia, which had at no time prior to disclosure of the findings
     of the reinvestigation made itself known, proposed an undertaking. After consideration,
     this proposal was judged to be unacceptable due to the total lack of cooperation from all
     Russian producers/exporters.
(36) The new level of anti-dumping duty was determined by adding to the previous level of
     the duty (minimum import price less export price at the Community frontier in the
     original investigation period) the difference between the export prices in the original
     investigation and those of the current reinvestigation. The amended duty, to be levied
     on a per tonne net basis at the Community frontier, is ECU 26.3 per tonne.
     HAS ADOPTED THIS REGULATION:
                                             Article 1
     Article 1 par. 2 of Regulation (EC) No 2022/95 is hereby replaced by the following: "2.
     The rate of the anti-dumping duty applicable is ECU 26.3 per tonne."
                                              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.
                                                  12
 ---pagebreak--- Done at Brussels,
                     For the Council
                      The President
                  13
 ---pagebreak---  ---pagebreak---                                                                    ISSN 0254-1475
                                                            COM(98) 148 final
                                              DOCUMENTS
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                                    Catalogue number : CB-CO-98-157-EN-C
                                                             ISBN 92-78-32009-9
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