Russia enters the WTO. Consequences for the Polish chemistry

| Foreign Markets |

At the end of August, after many years of negotiations, Russia has joined the World Trade Organization. The Russians have been applying for it since 1995. The invitation of our eastern neighbour to the WTO is important especially for the EU chemical industry.

RUSSIA IN THE WTO – WHAT’S GOING TO CHANGE ?

After joining the World Trade Organization, Russia is forced to follow certain rules of law in trad of chemical products and fertilizers. Therefore, russian chemical enterprises are facing with the prospect of significant changes to their existing strategies. In addition, we can not forget that the current extinction of certain import duties on European Union’s territory is not permanent. EU politicians have no doubt that the protection of the EU market can be restored in case of having a proof for dual pricing of gas purchase. This is a kind of protection of the domestic market and chemical fertilizers from uncontrolled expansion of Russian companies. The chemical industry uses custom duties on ammonium nitrate from Russia, as a tool to protect their interests.

STRATEGY OF PULAWY COMPANY TO FACE THE COMPETITION FROM THE EAST

For several years we have been preparing for the possibility of more dynamic expansion of Russian companies on the EU and world markets. We have been operating in the field of investments for several years now. In recent years we have decided to create a new Fertilizer Complex in Pulawy Company, which will produce nitrogen fertilizers with additional components and a new character. For us they are going to a transition from typical production of mass commodity, such as urea in the specialist direction of modern fertilizer for specific crops.

“SHALE” HOPES

This is crucial to our company’s financial. An introduction of new products to our range, in the long term will bring higher margins, but will also protect us from the consequences of direct competition of the market with countries producing urea much cheaper thanks to lower cost of natural gas. Do not forget that the commercial potential of shale gas extraction can significantly change the situation on the markets. Then polish chemical companies will have access to cheaper sources of natural gas, and thus it will be possible to significantly reduce production costs.

“THINK GLOBALLY, ACT LOCALLY”

Company’s response to increasing competitiveness is also stepping up the decision-making processes governing the legal issues in Europe. The Company represents actively Polish and European chemical industry in the process of law-making in the field of fertilizers and chemical fertilizers, and the climate and energy package of the European Union. For many years we have been trying to determine the base for the Polish government’s agencies in these processes. This is part of foreign strategy of our company, which is based on the principle of “Think globally – Act locally”.

ACTIVE IN BRUSSELS AND STRASBOURG

One of such activities is being conducted in the area of “Industry Relations” – this is participation in international associations and organizations that make our Company create a unitary approach that represents the interests of Polish industry. In 2011, President Pawel Jarczewski was elected by the Assembly of European Producers for the vice president of Fertilizers Europe organization (formerly EFMA) and the head of Trade & Economic Committee. In addition, our plants are represented, in other Committees as well. Among them there are the Committee of Agriculture and Technical Committee.

Increasing presence of russian companies on the European market is not so much a threat for us, but motivates us to increase our activities in many fields and production efficiency.