Exporter Says Commerce Shouldn't Have Asked It About Other Potential CV Subsidies Without Evidence

A Moroccan exporter argued the Commerce Department can't ask open-ended questions about whether governments provided it any “other” subsidies, in questionnaires sent during administrative reviews (OCP S.A. v. U.S., CIT # 23-00261).

In asking the question, "Commerce unlawfully engaged in a 'fishing expedition"' in the countervailing duty review on phosphate fertilizers from Morocco, OCP said. In the questionnaire, Commerce had asked OCP if the Moroccan government had "provided to the producers or exporters of the subject merchandise under review any other non-recurring benefits" during the period of review and the preceding nine years.

"Commerce has authority to investigate a countervailable subsidy not alleged by the petitioner only if a practice discovered during the proceeding 'appears to be a countervailable subsidy' within the meaning of 19 U.S.C. § 1677d," OCP said. By asking whether OCP received any other benefits or assistance from the Moroccan government "without a scintilla of evidence on the record indicating that such 'assistance' in fact 'appear[s] to be a countervailable subsidy,' Commerce exceeded its statutory authority," the exporter said.

OCP took its complaint Jan. 8 to the Court of International Trade contesting the results of Commerce's 2020-2021 administrative review of the CVD order on its products.

OCP said it and the Moroccan government both answered the “unlawful” question “under threat of adverse facts available.”

"Commerce then preliminarily calculated a CVD rate for certain alleged programs that Commerce investigated only because of information OCP was required to submit,” it said.

In particular, Commerce, without substantiation, determined that a Moroccan tax, fines and penalties production program was specific enough to OCP to constitute a subsidy, OCP said. Commerce also determined that two other government programs OCP and the Moroccan government had disclosed were subsidies as well.

OCP also said Commerce inappropriately rejected a “minor correction” the exporter offered later in the review, and was incorrect to apply an AFA rate for a particular government program that the exporter had accidentally missed in its initial disclosures.

It said it did present Commerce a small payroll tax refund it received from the Moroccan government later in the CVD verification process. The exporter had only located that refund then because, unlike other government tax programs, the refund had not appeared in its tax returns, it said.

Regardless, Commerce refused to accept the refund as a minor correction, OCP said. The exporter said Commerce instead hit the company with an illegal AFA rate with respect to the refund, adding 1.27% to the prior calculated CVD.