Petitioner, Respondents Swap Briefs in Suit on Ecuadorian Shrimp CVD Investigation

The petitioner, the American Shrimp Processors Association, contested Commerce's decisions not to countervail either "free government-provided acces to brackish water" or the provision of "government-produced fuel" as well as the agency's requirement that the respondents only submit information for one cross-owned fresh shrimp supplier. The respondents, Industrial Pesquera Santa Priscila (Santa Priscila) and Sociedad Nacional de Galapagos (Songa), contested many aspects of the investigation, including Commerce's specificity determinations regarding the "Investment Contract program" and the "Annual Motor Vehicle Tax Reducation program."

In its brief, the association argued that Commerce bucked its statutory obligation to set CVD rates based on the "full universe of countervailable subsidies that the mandatory respondents benefited from during the" investigation period. The agency needed to receive questionnaire responses from each mandatory respondent and all of their cross-owned companies involved in producing subject shrimp. Commerce failed to do this by only asking for information for one cross-owned supplier.

The petitioner said Commerce "abused its discretion under the statute and unduly limited its examination of respondents, did not determine a final rate that accurately reflects the net countervailable subsidy, failed to abide by its own regulation that requires the benefit analysis to include subsidies received by cross-owned input suppliers, and unjustifiably deviated from its normal practice in CVD investigations." The agency then made "matters even worse" by refusing to apply facts otherwise available to "include the unexamined cross-owned suppliers in the subsidy analysis," the brief said.

The association also challenged the decision not to countervail government-provided access to brackish water. "A government-provided right to use or access brackish water in and of itself is the provision of a good and constitutes a financial contribution," the petitioner said, arguing that it's "irrelevant" that the Ecuadoran government didn't also pay for the equipment that the respondents needed to "extract, use, and return the water."

Commerce also erred by not countervailing the provision of government-produced fuel, the petitioner said. The record showed that Petroecuador is a governmental authority and supplied the private distributors the respondents bought from. It doesn't matter that the subsidy was provided indirectly, and the trade court previously said that the "statute’s broad definition of financial contribution includes scenarios where a good originates from the government but is sold through private middlemen," the brief said.

Meanwhile, Santa Priscila and Songa challenged the specificity findings regarding the Investment Contract and Annual Motor Vehicle Tax Reduction programs. Under the Investment Contract program, the Ecuadorian government provides tax benefits if an enterprise invests at least $1 million in new productive activities that generate additional employment opportunities. The motor vehicle tax reduction program, meanwhile, lets every Ecuadorian company receive an 80% reduction on the tax it would otherwise owe for each vehicle that weighed one ton or more that it used in productive and commercial activities, the respondents said.

The respondents said the Investment Contract program isn't de facto specific, since it's an "economy-wide infrastructure development program that the statute and the Statement of Administrative Action recognize as non-countervailable." The vehicle tax reduction program also isn't de facto specific, since the program gave the "identical tax reduction benefit on every qualifying vehicle to every company in Ecuador," the brief said. De facto specificity doesn't exist "where a subsidy is usage-based, and the recipient receives a larger share of the total benefit solely because of its greater usage," the respondents said.

Santa Priscila and Songa also faulted the agency for refusing to accept at the start of verification minor corrections submitted by both companies regarding their shrimp farming affiliates and the benefits the affiliates received under the vehicle tax reduction program. Commerce's basis for the rejection, which was the "number of vehicles involved," didn't constitute substantial evidence for determining the basis for Commerce's refusal, the brief said.

Relatedly, the respondents challenged Commerce's use of adverse facts available related to the benefits received by the companies and their affiliates under the vehicle tax reduction program. Santa Priscila and Songa said that since the program isn't de facto specific, there's no basis for the use of AFA, adding that, in the alternative, the record doesn't support the notion that the companies failed to comply to the best of their ability. In addition, the agency illegally selected a "non-similar" program for its AFA rate, the brief said.

The respondents then went on to challenge Commerce's rejection of a minor correction Songa presented at the start of verification concerning the benefit received under the Ecuadorian government's "Currency Outflow Tax Exemption for Imported Assets and Raw Materials program" and the related use of AFA. The respondents said the agency "abused its discretion by rejecting that correction" and "acted arbitrarily by simultaneously accepting a minor correction of the benefit amount that Songa received concerning a slightly different" program.

The respondents then went on to challenge Commerce's decision to assign a 1.38% AFA CVD rate to Songa for its alleged failure to timely provide information concerning the benefits it received under the outflow tax exemption program. The agency illegally picked a "non-similar" program for its AFA rate, making it a punitive margin, the brief said.