Importer Challenges Commerce's Tier 3 Benchmark Methodology in CVD Review

The Commerce Department relied on incomplete data when it used a Tier 3 benchmark calculation methodology in the 2020-21 review of the countervailing duty order on phosphate fertilizers from Russia, U.S. importer Archer Daniels Midland Co. argued in a Dec. 1 complaint at the Court of International Trade (Archer Daniels Midland Co. v. United States, CIT # 23-00239).

In the review, Commerce had used a Tier 3, or "market principles analysis," in assessing the amount of the countervailable subsidy exporter JSC Apatit received from the Russian government's provision of mining rights for phosphate rock. Commerce originally calculated the benchmark by "calculating the average of the prices that third countries charged in their export sales of phosphate rock" during the review period. To complete this task, the agency used two databases, IHS Markit's Global Trade Atlas and the UN Comtrade database, that each had the volume and prices of phosphate rocket exports in third countries.

Both data sets used the export volumes and values for goods exported under Harmonized Tariff Schedule subheading 2510.10, which provides for unground natural calcium and aluminum calcium phosphates and phosphatic chalk, and also goods traded under subheading 2510.20, which covers the ground version of these items. Commerce said the benchmark calculation should only include an average of the values of phosphate rock exports from the countries that make phosphate rock from igneous ore formations.

Commerce excluded the volumes and values of phosphate rock exports from countries that make phosphate rock from sedimentary ore formation, despite the fact that this rock is "indistinguishable in quality and other relevant characteristics from rock" made from igneous ore formations, the complaint said. In all, the agency used values from only Finland, Brazil and South Africa in the GTA database. The UN Comtrade data had the same "volume, value, and [average unit value] data for Brazil and South Africa, but not for Finland," the importer said.

The agency calculated Apatit's per-unit cost to mine phosphate rock then subtracted this figure from the benchmark price of phosphate rock, multiplying the difference by the total amount of rock Apatit made from its phosphate ore mining deposits. The result was a 51.57% preliminary rate for Apatit due to the benefit it received from the mining rights.

Archer Daniels argued during the review that the benchmark calculations "erroneously 'double counted' the values and volumes of phosphate rock exported from Brazil and South Africa," since they both appeared in the GTA and Comtrade databases. The importer also said that Commerce "should have included phosphate rock export values, volumes ,and resulting AUVs from" Togo and Iran as well, since they exported phosphate rock of the same quality for use in the production of phosphate fertilizer.

In the review's final results, Commerce revised its Tier 3 benchmark and removed the "double counting," relying only on the GTA database to set the benchmark. However, the agency didn't use the values from phosphate rock from Togo and Iran, finding that the rock wasn't comparable to the rock made in Russia "because it was mined from sedimentary ore deposits rather than from igneous ore deposits." The final CVD mark for Apatit was 28.5%.