Commission Implementing Regulation (EU) 2020/2100 of 15 December 2020 imposing a definitive anti-dumping duty on imports of ammonium nitrate originating in Russia following an expiry review pursuant to Article 11(2) of the Regulation (EU) 2016/1036 of the European Parliament and of the Council

THE EUROPEAN COMMISSION,

Having regard to the Treaty on the Functioning of the European Union,

Having regard to Regulation (EU) 2016/1036 of the European Parliament and of the Council of 8 June 2016 on protection against dumped imports from countries not members of the European Union (1) (‘basic Regulation’), and in particular Article 11(2) thereof,

Whereas:

(1) By Council Regulation (EC) No 2022/95 (2) (‘original investigation’), the Council imposed a definitive anti-dumping duty on imports of ammonium nitrate falling at the time of the entry into force of the regulation under CN codes 3102 30 90 and 3102 40 90 and originating in Russia (‘the country concerned’). Pursuant to a further investigation, which established that the duty was being absorbed, the measures were amended by Council Regulation (EC) No 663/98 (3).

(2) Following a first expiry review and a first interim review pursuant to Articles 11(2) and 11(3) of Regulation (EC) No 384/96 (4) the Council, by Council Regulation (EC) No 658/2002 (5), imposed a definitive anti-dumping duty of EUR 47,07 per tonne on imports of ammonium nitrate falling at the time of the entry into force of the regulation under CN codes 3102 30 90 and 3102 40 90 and originating in Russia.

(3) Subsequently, a product scope interim review pursuant to Article 11(3) of Regulation (EC) No 384/96 was carried out and, by Council Regulation (EC) No 945/2005 (6), a definitive anti-dumping duty ranging between EUR 41,42 per tonne and EUR 47,07 per tonne was imposed on imports of solid fertilisers with an ammonium nitrate content exceeding 80 % by weight, falling at the time of the entry into force of the regulation under CN codes 3102 30 90, 3102 40 90, ex 3102 29 00, ex 3102 60 00, ex 3102 90 00, ex 3105 10 00, ex 3105 20 10, ex 3105 51 00, ex 3105 59 00 and ex 3105 90 91 and originating in Russia.

(4) Following a second expiry review and a second partial interim review pursuant to Articles 11(2) and 11(3) of Regulation (EC) No 384/96, the Council, by Council Regulation (EC) No 661/2008 (7), maintained the measures in force. The duty was left unchanged, except for the EuroChem group, for which the fixed amount of duty ranged between EUR 28,88 and EUR 32,82 per tonne.

(5) The European Commission (‘the Commission’), by Decision 2008/577/EC (8), accepted the undertakings’ offers with a quantitative ceiling from the Russian producers JSC Acron and JSC Dorogobuzh, members of the Acron Holding Company and from EuroChem group.

(6) By judgment of 10 September 2008 (9), interpreted by judgment of 9 July 2009 (10), the General Court annulled Regulation (EC) No 945/2005 in so far as it concerned JSC Kirovo-Chepetsky Khimichesky Kombinat (‘Kirovo’), part of OJSC UCC UralChem (‘Uralchem’). The Council, by Council Regulation (EC) No 989/2009 (11), amended Regulation (EC) No 661/2008 accordingly. Consequently, for the company Kirovo the anti-dumping duty at the time of the entry into force of the Regulation (EUR 47,07 per tonne) applied only to imports of ammonium nitrate falling under CN codes 3102 30 90 and 3102 40 90.

(7) By Decision 2012/629/EU (12), the Commission withdrew its acceptance of the undertaking offered by the EuroChem Group because of the impracticability of the undertaking.

(8) Following a third expiry review pursuant to Article 11(2) of Regulation (EC) No 1225/2009 (13), the Commission, by Commission Implementing Regulation (EU) No 999/2014 (14), maintained the measures in force. That investigation is hereafter referred to as ‘the last expiry review’

(9) Commission Implementing Regulation (EU) 2016/226 (15) amending Implementing Regulation (EU) No 999/2014 addressed the restructuring of Kirovo as a branch of Uralchem.

(10) The Commission, by Commission Implementing Regulation (EU) 2016/415 (16), withdrew the acceptance of the undertaking for the Acron Holding Company due to the impracticability of the undertaking.

(11) Following a review pursuant to Article 11(3) of Implementing Regulation (EU) 2018/1722 (17), the Commission amended the measures in force. That investigation is referred to as ‘the last interim review’. On this basis, the fixed amount of duty currently in place range between EUR 28,78 and EUR 32,71 per tonne.

(12) Following the publication of a notice of impending expiry (18) of the anti-dumping measures in force on the imports of ammonium nitrate originating in Russia, the Commission received a request for review pursuant to Article 11(2) of the basic Regulation.

(13) The request was lodged on 21 June 2019 by a European association of fertilizers manufacturers, Fertilizers Europe (‘the applicant’ or ‘FE’), on behalf of Union producers representing more than 25 % of the Union production of ammonium nitrate.

(14) The request was based on the grounds that the expiry of the measures would be likely to result in continuation and/or recurrence of injurious dumping of injury to the Union industry.

(15) Having determined that sufficient evidence existed for the initiation of an expiry review, the Commission announced on 23 September 2019, by notice published in the Official Journal of the European Union (19) (‘the Notice of Initiation’) the initiation of an expiry review pursuant to Article 11(2) of the basic Regulation.

(16) In the Notice of Initiation, the Commission invited interested parties to contact it in order to participate in the investigation. In addition, the Commission specifically informed the applicant, other known Union producers, exporting producers, importers and users in the Union known to be concerned, and the Russian authorities of the initiation of the expiry review and invited them to participate.

(17) All interested parties had the opportunity to comment on the initiation of the review and to request a hearing with the Commission and/or the Hearing Officer in trade proceedings.

(18) Following initiation, the Russian Fertilisers Producers Association (‘RFPA’) submitted that the request failed to provide sufficient evidence that the expiry of the anti-dumping measures on Russian ammonium nitrate (‘AN’) would result in the likely continuation or recurrence of dumping or injury. More specifically, RFPA submitted that since the original review request filed on 21 June 2019 (‘original review request’) provided no evidence of domestic sales being made outside the ordinary course of trade, the calculation of the dumping margin based on the construction of the normal value was illegal. RFPA further argued that the review request of 21 June 2019 did not have any evidence of dumping based on the comparison of actual domestic prices with export prices and that the applicant added such evidence only to the revised version of the request based on a deficiency letter issued by the Commission.

(19) Furthermore, RFPA claimed that the applicant’s cost calculations were based on an inflated cost of manufacturing. They also claimed that the calculations of a constructed normal value were manifestly erroneous, based on unreliable, internally inconsistent, outdated information, incomprehensible data and mere estimates of a consultant, and that the Commission failed to diligently review these calculations.

(20) The Commission initiated the expiry review based on the review request as initially submitted on 21 June 2019 and further supplemented by additional information (collectively referred to as ‘consolidated review request’). The consolidated review request, which constitutes the basis for the initiation of this expiry review, was placed in the open file and made available to interested parties for consultation. As stated in point 4.1 of the Notice, the Applicant provided in its review request evidence of a normal value based on actual domestic prices and equally constructed the normal value in case the domestic prices would not be considered as reliable and reflecting ordinary course of trade. Whether the original request was supplemented with estimated normal values on the basis of information available on actual domestic prices in the country concerned is irrelevant insofar as the Commission initiated the expiry review on the basis of the consolidated review request.

(21) Regarding unreliability of data used by the Applicant in its allegations, a review request must contain sufficient evidence necessary to support the initiation of the review. The quality of this evidence will necessarily be limited by the applicant’s ability to have access to the relevant information, which in most cases is confidential. Potential inaccuracies in the applicant’s request uncovered during the investigation however do not render the initiation of this expiry review unlawful and the Commission investigation in this case in fact confirmed that the initiation was warranted.

(22) Following the disclosure, RFPA (20) reiterated their argument that no expiry review request that would satisfy the requirements of Article 11(2) of the basic Regulation had been lodged within the legal deadline. According to RFPA, it is the original review request that constitutes the basis for the initiation of the expiry review and against which the sufficiency-of-evidence requirement has to be assessed. Acron and the Russian Government provided similar arguments after the final disclosure. RFPA further submitted that while the Union producers could have clarified the evidence provided in the original review request, entirely new evidence on the likelihood-of-dumping or injury submitted outside the legal limit (i.e. 3 months before the end of the five-year period) should be disregarded. In this context, RFPA also referred to the Decision of the European Ombudsman (21) concerning a previous expiry review as well as to the recommendation of the Hearing Officer to the Commission services to disclose the original review request in the current review.

(24) Furthermore, after the definitive disclosure, RFPA and the Russian Government claimed that the fact that the consolidated review request constituted the basis for initiation was not supported by the record of the investigation.

(25) The consolidated review request was placed in the file for inspection by the interested parties at initiation stage. There is no ambiguity as to the fact that the expiry review was initiated on the basis of that request. This can be confirmed by the reading of section 4.1 of the Notice of Initiation, which clearly referred to evidence stemming from the consolidated review request.

(26) With reference to Article 5(3) basic Regulation, RFPA submitted that the Commission failed to examine the accuracy and adequacy of the evidence provided by the applicant. In that context, RFPA also noted that both, the original and consolidated review requests only alleged the existence of a likelihood of continuation of dumping, while the Commission did not make any findings as to the continuation of dumping.

(27) The Commission notes that the argument is based on a misunderstanding of the purpose of a request on the one hand and the purpose of a review investigation on the other hand. The purpose of a request is to justify the initiation of an expiry review investigation based on the evidence reasonably available to the applicant as regards continuation or recurrence of injurious dumping. As explained above, the request contained sufficient evidence to that effect. On the other hand, the purpose of the review investigation is to determine whether the expiry of the measures would be likely to lead to continuation or recurrence of dumping and injury based on the information collected from the various interested parties during the review investigation. It is perfectly factually possible and legally admissible that the evidence available to the applicant shows a likelihood of continuation of dumping while the investigation will establish, based on the information collected from and verified with interested parties, that dumping is in fact likely to recur. To this effect, point 5 in the Notice of Initiation states that ‘[h]aving determined (…) that sufficient evidence of a likelihood of dumping and injury exists to justify the initiation of an expiry review, the Commission hereby initiates a review in accordance with Article 11(2) of the basic Regulation’. The Notice of Initiation further specifies that ‘[t]he expiry review will determine whether the expiry of the measures would be likely to lead to a continuation or recurrence of dumping of the product under review originating in the country concerned and a continuation or recurrence of injury to the Union industry’. Thus, having evidence tending to show continuation of dumping is sufficient to trigger an investigation on whether there is continuation or recurrence of dumping. Therefore, this claim is rejected.

(28) RFPA and Acron submitted, with reference to the WTO panel report issued on 24 July 2020 (22) (‘DS494 Report’), that (i) the previous expiry review in this case should not have been initiated, due to a lack of sufficient evidence of the likelihood-of-dumping and hence that the Commission should repeal the anti-dumping measures on ammonium nitrate from Russia and (ii) this expiry review is vitiated by the same errors as the previous review and therefore should not have been initiated. In this context, both RFPA and Acron repeatedly referred to the review request as lodged on 21 June 2019 and evidentiary shortcomings thereof. Similar claims were restated by RFPA and the exporting producers following the final disclosure.

(29) RFPA’s and Acron’s comments have to be rejected for the following reasons. First, the findings of the DS494 Report are subject to appellate proceedings and therefore the panel’s findings are not final. Second, as set out in recital (20), initiation in this expiry review is not solely based on information as received in the original review request of 21 June 2019, but also on further evidence supplemented by the applicant prior to the initiation and included in the consolidated review request (containing evidence of a normal value based on actual domestic prices as well as a constructed the normal value in case the domestic prices would not be considered as reliable).

(30) RPFA also submitted that RFPA’s rights of defence had been breached because of the Commission’s denial of access to a full version of certain annexes of the review request.

(31) All requests for access to file made in this case by the interested parties, including RFPA, have been diligently examined. The Commission ensured that revised and meaningful non-confidential versions of the disputed documents, including annexes of the review request, were provided to the parties.

(32) In the Notice of Initiation, the Commission stated that it might sample interested parties, in accordance with Article 17 of the basic Regulation.

(33) In its Notice of Initiation, the Commission stated that it had provisionally selected a sample of Union producers. In accordance with Article 17(1) of the basic Regulation, the Commission selected the sample on the basis of the largest representative volume of sales which could reasonably be investigated within the time available, considering also the geographical location. This sample consisted of three Union producers. The sampled Union producers accounted for 40 % of the production volumes of the companies that have come forward in the standing exercise and around 35 % of the estimated total production in the Union. The Commission invited interested parties to comment on the provisional sample.

(34) Some interested parties submitted comments with regard to the provisional sample. The Commission considered the comments and explained in the note added to the open file on 14 October 2019 the reasons why those comments could not be accepted. As a result, the original sample was maintained.

(35) Several interested parties reiterated and provided additional claims regarding the sample of the Union producers after the deadline to provide comments and after their initial comments had been addressed in the Note to the open file.

(36) Two interested parties reiterated their claim that the sample of the Union producers was not representative and requested the exclusion of two Union producers for which injury was found in another investigation of mixtures of urea and ammonium nitrate (‘UAN case’) (23). They claimed that ammonium nitrate solution was a semi-finished product used for both ammonium nitrate and UAN. Therefore, injury to one product would automatically translate to injury for both products. In addition, ammonium nitrate is produced with the same equipment; therefore, there is only one common cost of production. Consequently, if the ammonium nitrate production line is underutilized due to the reduced production and sales of urea and ammonium nitrate, the higher fixed cost will impact profitability of ammonium nitrate for free or captive use alike. Therefore, there are no means to break a single micro economic indicator between ammonium nitrate used for the free and captive market.

(37) The Commission disagreed with this claim. In all investigations, costs are allocated to the product being investigated only. Indeed, if there were no means to correctly and reasonably allocate the cost of production of vertically integrated producers, the information provided by any such producer investigated would be put in question (including the cooperating exporting producers in Russia of this investigation). Therefore, it is within a standard Commission’s practice that all economic indicators refer distinctively to the product in question, including the indicator of the cost of production. Accordingly, when verifying the vertically integrated sampled Union producers in question, the Commission ensured that there was a clear distinction in cost incurred for each product produced within these companies. The argument of the parties was therefore dismissed.

(38) One interested party claimed that the production of both, ammonium nitrate and urea and ammonium nitrate is not common among the Union producers of ammonium nitrate. This fact jeopardizes the sample and makes it a non-representative.

(39) The two sampled Union producers are two of the three largest Union producers of ammonium nitrate in terms of the production and sales volumes reported in the standing exercise. This fact contradicts the allegation that production of both, ammonium nitrate and urea and ammonium nitrate is not common among EU producers of ammonium nitrate, and would not be representative or typical of the Union industry. The argument of the party was dismissed.

(40) To decide whether sampling was necessary and, if so, to select a sample, the Commission requested all unrelated importers to provide the information specified in the Notice of Initiation.

(41) No importers came forward to provide the information requested in the Notice of Initiation.

(42) In view of the apparent large number of exporting producers in Russia, sampling was envisaged in the Notice of Initiation.