Trade Court Upholds Use of CVD Respondent's Profit Before Tax Mark in Profit Ratio

The Court of International Trade on Jan. 19 sustained the Commerce Department's use of exporter PhosAgro's profit before tax number instead of its gross profit mark when calculating the company's phosphate mining rights benefit.

The case was previously remanded so Commerce could consider PhosAgro's arguments in defense of the gross profit number for the profit ratio in the countervailing duty investigation on phosphate fertilizers from Russia. The exporter said the number "more accurately reflects the commercial reality of" its pricing process, adding that the agency's profit before tax calculation "leaves out important expenses and business considerations" from the profit comparison. If the agency stays with the profit before tax number, it should at least include additional expenses needed to ensure a "reasonable comparison of the alleged benefit," PhosAgro said.

Judge Jane Restani ruled that PhosAgro "failed to demonstrate that including expenses broader than those involved in the mining and beneficiation of phosphate ore would bolster Commerce's goal to render an accurate profit ratio." As Commerce explained, "profit before tax is narrower and helps to isolate costs for phosphate ore mining and beneficiation activities," the court noted. Using the gross profit calculation would "include costs unrelated to the mining of phosphate ore such as selling and administrative expenses, taxes other than income taxes, and 'other' expenses."

Restani remanded the case twice before, most recently in July 2023. In that opinion, the court said Commerce can "explain why reconciling to PhosAgro's financial statements," instead of those from its subsidiary JSC Apatit, was sufficient; explain why it found exporter EuroChem's submission was supported and respond to petitioner The Mosaic Co.'s objections; and consider PhosAgro's claims regarding the profit before tax figure (see 2307120028). On remand, the agency issued an additional questionnaire to each of the mandatory respondents and said that it addressed all the remanded issues.

(The Mosaic Co. v. United States, Slip Op. 24-4, CIT # 21-00117, dated 01/19/24; Judge: Jane Restani; Attorneys: David Ross of Wilmer Cutler for plaintiff The Mosaic Co.; Ebonie Branch for defendant U.S. government; Jonathan Stoel of Hogan Lovells for defendant-intervenors PhosAgro and JSC Apatit; Jeremy Dutra of Squire Patton for defendant-intervenor Industrial Group Phosphorite)