Poland takes action on 30 pct duty on fertiliser imports from Russia and Belarus

Poland's Ministry of State Assets (MAP) has asked the Ministry of Economic Development and Technology (MRiT) to request the European Commission to impose a 30 percent tariff on fertiliser imports from Russia and Belarus, the assets ministry told PAP. The development ministry has taken diplomatic action on the issue.

Listed chemicals group Azoty is implementing a recovery programme due to its difficult financial situation. However, it is alarmed that for months it has been struggling with increasing fertiliser imports from Russia and Belarus.

According to Poland's stats office GUS, after seven months of this year, fertiliser imports from Russia to Poland amounted to over 721,500 tonnes, up from 246,700 tonnes in a prior year period. Fertiliser imports from Belarus at that time exceeded 185,500 tonnes versus 13,400 tonnes in the similar period last year.

"We are already facing a significant weakening of the profitability of production in the EU. In this situation, growing imports pose a very big threat to our industry," Grupa Azoty assessed when asked to comment on this situation.

The group added that, on average, more than 60 percent of its revenue comes from the agro segment, as Azoty ranks second in the European Union in the production of nitrogenous and compound fertilisers.

Azoty indicated that if tariffs were imposed on producers from Russia and Belarus, the European Union would remain self-sufficient when it comes to supplying farmers with fertilisers.

"In the 2022/2023 season, domestic consumption of nitrogenous fertilisers was just above 50 percent and NPK fertilisers above 60 percent of domestic production capacity," Azoty group pointed out.

As reported to PAP by the state assets ministry, the minister Jakub Jaworowski has already asked the economic development minister Krzysztof Paszyk to coordinate and consider applying to the European Commission's Directorate-General for Trade (DG TRADE) to set tariffs on fertiliser imports from Russia and Belarus at 30 percent.

Poland's Ministry of State Assets added that a Polish-German intergovernmental consultation took place in July at the headquarters of the Ministry of Economic Development and Technology, with the participation of Robert Habeck, Germany's Deputy Chancellor and Federal Minister for the Economy and Climate Protection.

At the time, state assets minister Jakub Jaworowski drew attention to the surge in the production and import of fertilisers from Russia and Belarus to the EU market and the impact of this on local producers.

The minister then stressed the need for decisive action within the EU, i.e. possible sanctions as well as the introduction of tariffs on fertilisers. Jaworowski also pointed out that in August 2024, on the initiative of state assets deputy minister Jacek Bartminski, a meeting was also held with representatives of the development, agriculture and finance ministries to work out measures to protect the Polish market from the influx of fertilisers from Russia and Belarus.

The Ministry of Economic Development and Technology (MRiT) in its response to PAP, recalled that the European Union's trade policy falls under its exclusive competence and, therefore, the possible introduction of customs duties requires the involvement of the European Commission.

"The Ministry of Economic Development and Technology has undertaken, coordinated between various ministries, and member states, diplomatic efforts to propose solutions at the EU level to limit fertiliser imports from the above-mentioned countries," the ministry said.

PAP also asked the Polish Internal Security Agency (ABW) whether it monitors the phenomenon of fertilisers being imported into the Polish market from Russia and Belarus, which are subject to sanctions in connection with the war in Ukraine, and how it assesses the scale of the threat.

"The identification of significant threats detrimental to the economic security of the Republic of Poland, often resulting from the activities of foreign intelligence services, remains within the material jurisdiction of the Internal Security Agency," ABW admitted.

It stipulated, however, that information on possible threats obtained by ABW officers is, however, "only passed on to the relevant government administration bodies."

The Ministry of Finance, on the other hand, assured that in order to enforce sanctions related to the war in Ukraine imposed on Russia and Belarus, the National Tax Administration (KAS) uses all available legal instruments to properly control shipments at risk of circumventing sanctions.

As the ministry indicated, in the case of fertiliser imports, KAS carries out control activities consisting, among others, in detailed verification of customs declarations and attached documents, examination of invoices and financial flows between the parties to the transaction, verification of proofs of origin, including verification of the proof of origin in the issuer's country, examination of the authenticity of documents in the customs laboratory, conducting customs controls after the release of goods at the trader's premises.

"In particular, matters of cooperation with international organisations of an economic nature and the conduct of activities in the field of shaping and implementing the rules of trade of the European Union with third countries fall within the competence of the Ministry of Economic Development and Technology," the finance ministry pointed out.

It added that in the case of the establishment of protective mechanisms in trade with third countries, the customs authorities of the KAS enforce trade policy instruments, to the extent that this results from the protective regulations introduced.

Asked by PAP whether it sees a problem of excessive fertiliser imports from Russia and Belarus, the Ministry of Agriculture and Rural Development assessed that "the fertiliser market in Poland is regulated and in accordance with both EU and national regulations (Fertiliser and Fertilisation Act)."

"Only producers who meet certain requirements can operate on this market," it stressed.

It also replied that it did not have data on which companies import fertilisers to Poland from Russia and Belarus.

PAP also asked whether the agriculture ministry had an estimate of how much the price of imported fertilisers would increase if there were no domestic sources of production.

"The ministry does not have such information. We have a domestic fertiliser industry and farmers benefit from this domestic production," it replied.

Azoty Group told PAP that since the end of March 2024, it has been preparing analyses, holding a series of meetings and sending letters to decision-making institutions at the EU level, including within Fertilizers Europe organisation, to present its positions in relation to alarming levels of fertiliser imports from Russia and Belarus.

According to the company, in the case of fertiliser imports from the East, the problem will not be solved by CBAM (so-called carbon tax).

The full implementation of the CBAM mechanism is scheduled for January 2026, at which time it will provide support in the area of the carbonisation of imported products, but will remain unaffected by, among other things, the issue of gas prices, on the basis of which companies from Russia and Belarus carry out their production.

"We are talking about 2026, while as producers in the EU we have been paying the costs of the ETS, i.e. CO2 emission allowances, for many years," Grupa Azoty added.

It pointed out that fertilisers from Russia and Belarus are produced at a much lower gas cost and are not burdened with CO2 charges, among other things, resulting from the ETS system that applies in the EU.

"The steadily increasing imports from Russia and Belarus make the EU's dependence on fertilisers from these destinations real. We are already seeing that the prices of imported fertilisers are being deliberately undercut in order to significantly weaken the market and, consequently, the position of EU producers," Azoty group indicated, adding that at the same time Russian and Belarusian producers are investing in their factories and modernising fertiliser production technologies.

The company pointed out that this could have consequences for the European Union's food security.

"Restrictions in fertiliser production lead to restrictions in the production of ammonia, nitric acid and technological CO2 - all of which are critical components in the food sector for cooling, food packaging, slaughtering, disinfection, carbonated beverage production, among others," Azoty explained.

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