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A Mayer Brown International Trade team in Brussels, led by partner Nikolay Mizulin and associate Edouard Gergondet, successfully assisted the Russian Fertilizers Producers Association (RFPA) in Russia’s World Trade Organization (WTO) challenge to the European Union (EU)’s anti-dumping measures on ammonium nitrate that the EU maintains since 1995.

In its report circulated today in dispute DS494, European Union — Cost Adjustment Methodologies and Certain Anti-Dumping Measures on Imports from Russia — (Second complaint), the panel ruled that the EU acted in breach of the anti-dumping agreement because it initiated the 2014 expiry review of the anti-dumping measures based on a request that did not contain adequate evidence of the likelihood-of-dumping. The panel noted that the EU accepted as evidence of "dumping" and "likelihood of recurrence of dumping" the calculation made by the petitioners, but that there is no indication that the normal value constructed by the applicant and "verified" by the European Commission was based on the cost of production in the country of origin. The panel’s findings mean that – at the time the Commission decided to initiate the expiry review in 2013 – it did not have sufficient evidence of a likelihood of dumping. Absent sufficient evidence of a likelihood of dumping, the EU therefore should have let the measures expire.

Furthermore, while the panel refused to consider issues which it deemed to have been last considered before Russia’s WTO accession, it also faulted the EU for the wrongful conduct of the 2014 expiry review of the antidumping measures, namely by failing on multiple instances to make evidence available promptly to Russian producers; illegally withholding the original version of the expiry review request; and granting confidential treatment to a submission without requesting or obtaining that the interested party submitting the information show good cause.

Finally, the panel report is remarkable in that the Russian government secured a ruling by the panel that the EU unlawfully applies an unwritten "cost adjustment methodology” in anti-dumping investigations. Pursuant to such methodology, the EU rejects the recorded costs of exporting producers and adjusts them with out-of-country benchmarks. If adopted, the panel’s findings on the EU’s cost adjustment methodology would likely have important ramifications. On the one hand, measures currently in force, which are based on the cost adjustment methodology, should be reviewed pursuant to Regulation (EU) 2015/476 on the measures that the union may take following a report adopted by the WTO Dispute Settlement Body concerning anti-dumping and anti-subsidy matters. On the other hand, the panel's findings will prevent the EU from continuing to adopt measures based on the cost adjustment methodology going forward.