USITC to reexamine antidumping duties on urea imports following ruling by Court of International Trade judge
A U.S. Court of International Trade (CIT) judge has ordered the U.S. International Trade Commission (ITC) to take another look at certain aspects of its November 2005 sunset review decision to continue antidumping duty orders on solid urea imports from Russia and Ukraine.
In 2005 the six ITC commissioners voted in a split decision to affirm antidumping duties on urea imports from Russia and Ukraine for another five years (GM Nov. 21, 2005), claiming that removing them would likely lead to a “continuation or recurrence of material injury” to domestic urea producers “within a reasonably foreseeable time” because of unfairly traded imports from the subject countries.
CIT Judge Judith Barzilay, however, issued a ruling on Aug. 28 remanding certain parts of the decision back to the ITC for clarification and further analysis. The ruling came after an appeal of the ITC decision by Russian urea producers Nevinnomysskiy Azot, Novomoskovsk Azot JSC, JSC MCC Eurochem, Kuybyshevazot JSC, JSC “Azot” Berezniki, and JSC “Azot” Kemerovo.
The Russian plaintiffs outlined several criticisms of the ITC decision in their appeal, some of which were weighty enough to convince Barzilay to send the decision back to the ITC. Among these, Barzilay said the ITC needed to “address the deficiencies” in its claims that urea imports from the subject countries were likely to depress U.S. urea prices, “in light of the already substantial presence of low-cost non-subject imports in the domestic market.”
In addition, Barzilay said the ITC needed “more rigorous analysis” of the effects of “third-country barriers” in its examination of whether the likely volume of subject imports would be significant if the antidumping orders were revoked.
Barzilay also questioned the ITC’s conclusion that revocation of the orders would “render the domestic industry vulnerable to material injury,” particularly in light of the improved financial picture for domestic producers since the antidumping duty orders were instituted in the late 1980s and administered throughout the 1990s. The ITC must reassess “the likely impact of subject imports on the domestic industry to account for the difference between the first sunset reviews’ findings and the findings of the current review within the context of the domestic industry’s recent improved performance,” she said.
Barzilay did not buy all of the plaintiff’s arguments. One of these was the claim by Russian producers that competition would be limited between the predominantly prilled urea imports from the subject countries and the granular urea manufactured by domestic producers and generally preferred by U.S. growers. Barzilay said the CIT “affirms the ITC’s finding of a likely reasonable overlap of competition between the subject imports and the domestic like product if Commerce revokes the [antidumping duty] orders.”
Barzilay gave the ITC until Nov. 26, 2007, to file its remand results with the CIT. The subsequent deadline for responses from the plaintiffs and “defendant-intervenors” is Dec. 28, 2007. The defendant-intervenors include Agrium U.S. Inc. and the Ad Hoc Committee of Domestic Nitrogen Producers, whose urea-producing members include CF Industries Holdings Inc. and PCS Nitrogen Inc.
In a related development, the Agricultural Retailers Association and more than 30 state agribusiness associations and commodity trade groups sent a letter in August to Carlos Gutierrez, Secretary of the U.S. Department of Commerce, urging his support for the removal of antidumping duty orders on solid urea and ammonium nitrate imports from Russia and Ukraine.
“These orders are no longer sensible, and the facts that gave rise to them no longer exist,” the Aug. 15 letter says, citing “massive structural changes” to the Russian economy since the orders were originally imposed in 1987 against imports from the Soviet Union.
“These changes are reflected in the companies who produce and export fertilizer and who now operate under market conditions,” the letter states. “Russian fertilizer companies are privately owned and controlled and comprise one of the largest fertilizer producing sectors in the world. However, because the Cold War-era antidumping duties imposed by the United States are prohibitively high, much of Russia’s and Ukraine’s fertilizer production is unavailable to the U.S. market.”
These import barriers, the letter continues, “deprive U.S. farmers of additional supply options for fertilizer competitively priced in the world marketplace and unnecessarily burdens them with significantly higher costs of production during a time of short domestic fertilizer supplies and expansion of crops to meet the nation’s growing ethanol demand.”
The letter also urges support for a request earlier this year by Russian fertilizer producer EuroChem for a “new shipper review” under the antidumping duty orders because the company did not exist when the orders were first imposed.
“We believe EuroChem’s new shipper review should proceed under the normal rules that apply to all market economy products, and any inquiry into cost of production should focus on what EuroChem’s costs actually are and not on what those costs ‘should be,’” the letter says. “Assigning a higher cost, in order to offset an alleged distortion in Russia’s domestic natural gas market, we believe would be the same as using antidumping calculations as a shortcut to impose an additional countervailing duty, without meeting the procedural and substantive requirements of a countervailing duty investigation.”