Commerce Impermissibly Found EU Ag Subsidy to Be Countervailable in CVD Case, CIT Says

The Commerce Department cannot construe the European Union's Common Agricultural Policy as a de jure specific domestic subsidy in a countervailing duty case on ripe olives from Spain, the Court of International Trade said in a June 17 opinion. Finding for the second time that Commerce’s interpretation of the statute is contrary to law, Judge Gary Katzmann found that the agency cannot permissibly find that the CAP was a countervailable specific domestic subsidy since “there is no uniform treatment across the agricultural sector in the provision of benefits.”

According to the decision, the CAP program provides subsidies to Spanish olive growers. However, CAP does not exclusively provide subsidies to Spanish olive growers. The program doles out subsidies through the Basic Payment Scheme. which provides subsidies based on "geographical indicators of farmland productivity," which is based on data provided by Spain's government. BPS relies on this data to allocate subsidies based on the productive potential of a region.

The rates don't vary with the type and amount of crop produced but instead reflect "historic data regarding agronomic practices carried out in the region," including whether it made olives. Commerce used this to find that "'the grant amounts received by olive growers under BPS ... are directly related to the grant amount only olive growers received, ...' and are therefore de jure specific to olive growers."

In his first decision in the case, brought by Spanish olive exporters, Katzmann said Commerce failed to even include a "reviewable interpretation" of whether this subsidy program was de jure specific and thus countervailable. In the June 17 decision, Katzmann found that Commerce's subsequent interpretation was impermissible since the law explicitly says that the subsidy program needs to limit access so that olive growers have an exclusive right to use the BPS payments. Since there was uniform treatment across the agricultural sector in the provision of benefits, Commerce's review of the specificity of the subsidy does not pass muster.

Commerce also impermissibly said that raw olives are a "prior stage product" of ripe olives -- a step in finding that subsidies to olive growers are attributable to ripe olive producers. Katzmann said that Commerce’s decision to define a prior stage product as the raw agricultural product that the subject industry considers primarily suitable for use in the prior stage of production is an impermissible interpretation of the law. "Commerce’s interpretation cannot be 'consistent with language and structure of the statute' if, by giving meaning to the term 'prior stage product,' it simultaneously causes the statute as a whole to become superfluous," Katzmann said.

(Asociacion de Exportadores e Industriales de Aceitunas de Mesa et al v. United States, CIT Slip Op. 21-76 # 18-00195, dated 06/17/21, Judge Katzmann. Attorneys: Matthew McCullough for plaintiffs Asociacion de Exportadores e Industriales de Aceitunas de Mesa et al.; Sonia Murphy for defendant U.S. government)