Spanish Olive Growers Blast Commerce's New Specificity Defense in CVD Row

The Commerce Department's finding that the European Union's Common Agricultural Policy is de facto specific to Spanish olive growers and thus countervailable is not backed by substantial evidence, plaintiffs in a case challenging this contention said in Dec. 3 comments submitted to the Court of International Trade. In its bid to corroborate this de facto specificity finding, Commerce actually shows the "proportionate nature of the programs," undermining the de facto finding, the comments on Commerce's remand results said (Asociacion de Exportadores e Industriales de Aceitunas de Mesa et al v. United States, CIT #18-00195).

The remand comments come from a case brought by Spanish olive exporters who are challenging the countervailing duty investigation into ripe olives from Spain. In the investigation, Commerce found that Spanish olive growers were receiving a subsidy via the EU's CAP scheme, which is administered through the Spanish government.

CIT has held twice now that this program is not specific to Spanish olive growers, making it ineligible to be a countervailable subsidy (see 2106170075). 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 historical data regarding agricultural practices carried out in the region, including whether the region made olives. Commerce found that the grants received by the olive growers under BPS are directly related to the grant amount only olive growers received, purportedly establishing de jure specificity.

CIT rejected this notion twice, most recently holding that since the law explicitly says that the subsidy program needs to limit access to it so that olive growers have an exclusive right to use the BPS payments, the program is not de jure specific. There was uniform treatment across the agricultural sector in the provision of benefits, leading to the conclusion that Commerce's review of the specificity of the subsidy does not pass muster, the judge ruled.

Commerce then shifted its position to say that the subsidies were de facto specific. This new standard requires Commerce to meet four factors, all meant to establish that the subsidies are effectively designed to one industry. To meet these standards, Commerce issued a supplemental questionnaire to the Spanish government to get the numbers behind the assistance approved on a per industry basis (see 2111040026).

The olive growers now argue that it was this attempt at corroboration that actually proves that the BPS benefits are not de facto specific. "Indeed, Commerce’s attempt to corroborate actually proves the opposite -- that BPS/Greening benefits are scalable based on the size of operation (i.e., the number of hectares/entitlements possessed), and therefore fundamentally proportionate, not disproportionate," the brief said. "This failure to corroborate what is already a tenuous calculation confirms that Commerce should decline to find de facto specificity."

In the remand results, Commerce also reconsidered its interpretation of a "raw agricultural product" and "prior stage product" to find that the demand for "distinct biological varietals of raw olives" is dependent on the demand for table olives. The agency needs to establish this to show that the subsidies for olive growers is in effect a subsidy on its downstream product and therefore a countervailable subsidy for the final product. Commerce instead found, on remand, that demand for distinct biological varietals of raw olives is dependent on the demand for table olives.

However, the Spanish olive producers now argue that this contention "does not survive scrutiny factually or legally," and is "the product of avoidance." It sidesteps the facts showing substantial shifting by the olive varietals in question between table olive and olive oil applications, blowing up any notion of dependence, the brief said. "It also avoids data, including varietal-specific data that would permit reasonable calculations and analysis showing a figure much lower than 55 percent," the brief said. "Commerce instead favors more generic data that do not control for the varietals Commerce purports to analyze and upon which it applies dubious assumptions and adjustments that are patently biased."