‘Where have all the distortions gone?’ Appellate Body Report, Ukraine – Ammonium Nitrate, WT/DS493/AB

27 Pages Posted: 9 Feb 2021

See all articles by Cristina Herghelegiu

Cristina Herghelegiu

Université Libre de Bruxelles (ULB) - European Center for Advanced Research in Economics and Statistics (ECARES)

Luca Rubini

University of Birmingham

Date Written: December 2020

Abstract

This article reviews the Appellate Body Report in the Ukraine – Ammonium Nitrate dispute that focused on the impact of Russia’s dual pricing in the natural gas market on the ammonium nitrate market. Interpreting the WTO Anti-Dumping Agreement (‘ADA’), the Appellate Body rejected the possibility to reject input costs, which, though distorted, were duly reported in the company’s records, and to replace them with a surrogate price which, for the Ukrainian authorities, was the (adjusted) export price of Russian natural gas at the German border. In this article, a) we fully review the background of the dispute, showing the connections between natural gas and ammonium nitrate prices, and the impact on Russia’s price regulation of the domestic market on them; b) we then review the ADA and concur with the interpretation of the Appellate Body, essentially for systemic reasons; c) for completeness, we also investigate whether econometrics could accurately determine the natural gas benchmark price in Russia and conclude in the negative; d) since dual pricing gives an economic benefit to domestic ammonium nitrate producers, we finally test dual pricing under the WTO subsidy rules. The conclusion is that the current disciplines are not likely to apply to dual pricing and lead us to conclude that important distortions are currently left without regulation in the WTO.

Keywords: Antidumping, discriminatory pricing, subsidies, natural gas, WTO dispute settlement

JEL Classification: F13, F51, q34

Suggested Citation

Herghelegiu, Cristina and Rubini, Luca, ‘Where have all the distortions gone?’ Appellate Body Report, Ukraine – Ammonium Nitrate, WT/DS493/AB (December 2020). Robert Schuman Centre for Advanced Studies Research Paper No. RSCAS 2020/99, Available at SSRN: https://ssrn.com/abstract=3782570 or http://dx.doi.org/10.2139/ssrn.3782570

Cristina Herghelegiu (Contact Author)

Université Libre de Bruxelles (ULB) - European Center for Advanced Research in Economics and Statistics (ECARES) ( email )

Ave. Franklin D Roosevelt, 50 - C.P. 114
Brussels, B-1050
Belgium

Luca Rubini

University of Birmingham ( email )

Edgbaston, Birmingham B15 2TT
United Kingdom

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