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‘Where Have all the Distortions Gone?’ Appellate Body Report, Ukraine–Ammonium Nitrate

Published online by Cambridge University Press:  02 July 2021

Cristina Herghelegiu  and
Luca Rubini
Cristina Herghelegiu
Affiliation:
Université Libre de Bruxelles, Belgium
Luca Rubini*
Affiliation:
Birmingham Law School, UK European University Institute, Italy
*
*Corresponding author: Email: l.rubini@bham.ac.uk
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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

WTO case lawanti-dumpingdual pricinggovernment distortionssubsidy
Type
Original Article
Information
World Trade Review , Volume 20 , Special Issue 4: WTO Case Law , October 2021 , pp. 566 - 581
Copyright
Copyright © The Author(s), 2021. Published by Cambridge University Press

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Footnotes

Although the paper is a joint-effort, Cristina Herghelegiu is mainly responsible for Parts 2, 3 and 5, Luca Rubini for Parts 4 and 6. Introduction and conclusions have been jointly written.

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