DOJ, US Olive Group Defend Commerce's Specificity Finding Over Subsidies to Spanish Olive Growers

The European Union's Common Agricultural Policy is de facto specific via its Basic Payment Scheme to Spanish olive growers since they receive a "disproportionately large" amount of its benefits, the Department of Justice and defendant-intervenor Coalition for Fair Trade in Ripe Olives told the Court of International Trade in a pair of briefs (Asociacion de Exportadores e Industriales de Aceitunas de Mesa v. United States, CIT #18-00195).

The dispute arises from a countervailing duty investigation into ripe olives from Spain. 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 distributes 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. The BPS relies on this data to allocate subsidies based on the productive potential of a region.

After having its claim that the subsidies were de jure specific rejected twice, Commerce shifted its position to say that the subsidies were de facto specific. The applicable standard includes four factors, all meant to establish that the subsidies are intended for one industry. 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 that filed the lawsuit argue the agency used data for an old subsidy program instead of the data for the CAP. "Although the figures are derived from the predecessor Single Payment Scheme, the petition also supplied information showing that, according to the European Commission, the approximately € 5 billion annual budget for assistance to Spanish farmers would remain stable from 2014 (the final year of the Single Payment Scheme and the year before the BPS took effect) through 2020," DOJ responded.

The petitioner coalition argued the olive growers massaged the data to back their arguments since the data backs Commerce's finding that certain biologically distinct varietals of olives is "substantially dependent on the demand for table olives." It also criticized the plaintiffs' position that Congress intended to require Commerce to "adhere slavishly to every factor of the methodology it employed in two cases from the 1980's, regardless of differences in products and industries that may require new approaches consistent with the statutory language."