AD Respondent, Petitioner Spar at CIT on Various Benchmark Picks in CVD Review on Phosphate Fertilizers

Three motions for judgment were filed at the Court of International Trade June 5 challenging the Commerce Department's 2020-21 review of the countervailing duty order on phosphate fertilizers from Russia (Archer Daniels Midland Company v. U.S., CIT # 23-00239).

Briefs from the sole respondent, Apatit, and from U.S. importer Archer Daniels Midland contested Commerce's Tier 3 benchmark calculation used to measure the benefit the Russian government allegedly provided Apatit as a result of its grant to the company of phosphate rock mining rights. The petitioner, The Mosaic Co., filed its own motion for judgment, challenging the agency's use of Kazakh export prices as the Tier 2 benchmark regarding the provision of natural gas to Apatit below cost.

Apatit also contested Commerce's calculation of the benefit the company received from its mining rights, arguing that the agency shouldn't have excluded the expenses needed to maintain the mining rights licenses nor used the company's profit before tax in its profit ratio. Commerce "unlawfully countervailed" Apatit's natural gas purchases from independent gas producers, the respondent said, because they aren't government authorities. Apatit also said the agency erred in only using data from 2021 instead of the entire review period, "including data from December 2020."

Both Apatit and Archer Daniels challenged Commerce's benchmark used in the mining rights benefit calculation. The agency found that the benchmark should be calculated solely by referring to "volumes and values of phosphate rock exported from three countries that produced it from igneous ore deposits." The three countries are Brazil, Finland and South Africa.

The importer argued that there's no evidence establishing a distinction between phosphate rock made from igneous ore formations "versus from sedimentary ore formations in terms of its grade, quality, marketability, or suitability for use in the production of phosphate fertilizer" where the rock's bone phosphate of lime content is similar. As a result, Commerce should have included export values from Togo and Iran, where phosphate rock is made from sedimentary ore formations.

Archer Daniels claimed that Commerce didn't dispute its evidence that Togo and Iran made phosphate rock from sedimentary ore formations with bone phosphate of lime content similar to the phosphate rock made in Russia. Thus, the agency should be ordered to include the data from Togo and Iran.

Apatit similarly said that the benchmark calculation isn't "reflective of prevailing market conditions in Russia and consistent with market principles." The respondent said Commerce bucked its statutory instruction to "act reasonably" when it "cherry-picked benchmark data" that was "extremely limited in scope" and "inconsistent with broader market principles." The agency looked at only one of the four "statutorily enumerated factors," quality, when picking a benchmark, the brief said.

The petitioner attacked a separate benchmark in the review -- the Tier 2 mark for the provision of natural gas for less than adequate remuneration -- which used Kazakh export prices. Mosaic argued that "Commerce’s finding that Kazakh export prices are 'available to' purchasers in Russia, and therefore that such prices may serve as a viable tier two benchmark, is inconsistent with its regulations and not supported by the record evidence." The agency failed to also "meaningfully" address the petitioner's claim that the Kazakh government's involvement in the market distorts the export prices, "rendering them unusable."