Fertilizer Exporter Says Commerce Went on 'Fishing Expedition' in CVD Review
The Commerce Department engaged in a "fishing expedition" during the 2022 review of the countervailing duty order on phosphate fertilizer from Morocco, seeking information on potential subsidies "without a scintilla of evidence" indicating that any countervailable benefits existed, exporter OCP argued. Filing a complaint at the Court of International Trade on Jan. 13, OCP argued that Commerce went beyond its statutory authority and "should never have investigated potential subsidies based on information provided by OCP" (OCP v. United States, CIT # 24-00227).
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The exporter argued that Commerce unlawfully asked the company to disclose "other forms of assistance" and "other benefits" the company received from the Moroccan government. The questions forced the company "to expend great time and effort to prepare and submit thousands of pages of information," despite the lack of evidence indicating that other benefits might amount to countervailable subsidies, OCP said.
In all, the respondent identified 12 potential subsidies that were supposedly "unlawfully investigated" in the review, including reductions in OCP's tax fines and penalties, revenue exclusions from minimum tax contributions and customs duty exemptions for capital goods and machinery. While Commerce only countervailed three of the investigated programs, OCP said it was illegal for the agency to ask about them in the first place.
Elsewhere in its complaint, the respondent took issue with the benchmark price Commerce used to value bone phosphate of lime. OCP said the range of bone phosphate of lime Commerce used to pick world market phosphate rock prices failed to account for prevailing market conditions since the agency ignored evidence showing that most of OCP's rock made during the review period was consumed locally with a lower bone phosphate of lime content. Only a minority of OCP's rock made during the review period was exported as rock with a higher bone phosphate of lime content, the brief said.
Commerce also erred in calculating the remuneration OCP gave to the Moroccan government to mine phosphate ore, the exporter said in challenging the agency's decision to countervail the provision of mining rights for less than adequate remuneration. OCP said the agency "failed to support with substantial evidence its decision to utilize OCP’s company-wide profit rate instead of rock-specific profit rates on the record." Evidence on the record showed that the agency's decision "is distortive because phosphate rock was much more profitable during the [period of review] than the other products captured by OCP’s company-wide profit rate," the brief said.
OCP additionally challenged Commerce's decision to allocate OCP's HQ and support costs on the basis of revenue instead of using an allocation based on site costs and the agency's continued examination of five alleged subsidy programs despite the lack of evidence. On the allocation of the HQ and support costs, the respondent said Commerce failed to address evidence showing that OCP's production sites didn't benefit from the respondent's HQ and support spending in proportion to the revenues generated from the company's sales of phosphate rock, fertilizers and other products.