Russia wants fertilizers duty lifted

| Foreign Markets |

In February 2013, Court of Justice of the European Union ruled that the anti-dumping duty on Russian fertilizers complies with EU law. Russia has not given up the fight yet, however, and has already turned to WTO with a request to conduct consultations with the European Union.

The root of the problem

Natural gas is a staple resource in the production of artificial fertilizers. Russia, with its dual-pricing policy, sells the fuel at different prices to domestic and foreign clients. Benefiting from cheaper gas, Russian fertilizer manufacturers enjoy lower production cost, which enables them to decrease fertilizer prices. In order to resist such unfair competition, the EU imposed anti-dumping duties on Russian fertilizers. In February 2013 European Court of Justice confirmed that the tax is in line with EU legislation. Naturally, the Russians were not convinced.

WTO member states have their obligations

The Russian Federation appealed to WTO for an intervention. However, let us not forget that the country has yet to fulfill its obligations concerning the liberalization of natural gas pricing. Fertilizers Europe, an association of leading European fertilizer manufacturers, including Grupa Azoty S.A., is confident that WTO will dismiss the Russian application, asserting the right to impose and calculate the anti-dumping cost.

What goes around comes around

The plaintiff may easily become the defendant. In this scenario, the EU would complain to WTO about Russia not having acted on the vow to liberalize natural gas prices. The abolition of dual-pricing could involve rising the prices of natural gas for the Russian clients. The consequences of such a move for the economy of the Russian Federation are difficult to predict, however.