Commerce Ignored Cut-Off Date for Assessing Subsidies From Russian Government, Exporter Says
The Commerce Department unlawfully chose to break with its past practice of not considering subsidies provided by the Russian government prior to April 1, 2002, in a countervailing duty review on phosphate fertilizers, respondent JSC Apatit argued. Filing a complaint at the Court of International Trade on Jan. 9, Apatit argued that Commerce failed to apply this cut-off date when analyzing whether mining rights were provided to the company for less than adequate remuneration in the 2022 review of the CVD order (Joint Stock Company Apatit v. United States, CIT # 24-00226).
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In countervailing Apatit's pre-April 2002 mining licenses, Commerce broke from its practice to not countervail alleged subsidies received before the cut-off date "due to previously existing broad distortions in the Russian economy," the exporter said.
The respondent's six-count complaint outlined various other alleged issues with the review, including the benchmark the agency used to assess whether Apatit received a benefit from the provision of mining rights for LTAR. For the benchmark, Commerce took the weighted average of Global Trade Atlas data for phosphate rock exports from South Africa, Brazil and Finland to set a world price benchmark.
Apatit said this data is "unrepresentative and skewed," given that the benchmark is "premised on an irrelevant and incorrect distinction among the type of phosphate ore used." The respondent said the benchmark price is "neither reflective of prevailing market conditions" nor in line with "market principles," as required by law. Instead, the exporter would have the agency use phosphate rock pricing data from EuroState or pricing data for phosphate rock exports from Togo or Jordan.
Specifically, the respondent took issue with Commerce's use of Global Trade Atlas export data for South African phosphate rock in Harmonized Tariff Schedule codes 2510.10 and 2510.20, given that the agency failed to include export data for phosphate rock in code 2835.26.90. Clear evidence shows that "excluding these data unlawfully inflates the South African benchmark price and thus the overall benchmark price," the complaint said.
Regarding Apatit's receipt of mining rights for LTAR, Commerce calculated the company's profit ratio by dividing the "Profit Before Tax" of Apatit's parent company by its "Cost of Sales." The respondent said that the use of profit before tax figure as opposed to the parent company's gross profit mark "excluded significant additional expenses necessary to adjust JSC Apatit’s cost of production for an appropriate comparison to an export sales price benchmark."
The respondent also took aim at Commerce's alleged failure to "adjust for the administrative and selling expenses incurred by JSC Apatit’s phosphate production branch in calculating JSC Apatit’s profit ratio" and improper determination that all of Apatit's natural gas suppliers are government authorities.
The agency used adverse facts available to find that Apatit's natural gas suppliers are government authorities due to the Russian government's failure to fully respond to Commerce's requests for information. The respondent said the agency should have excluded gas purchases from "certain independent gas suppliers."
The company's final CVD rate in the review was 18.21%.