CVD Petitioner, Respondent Trade Briefs on Review of Moroccan Phosphate Fertilizers

Countervailing duty petitioner The Mosaic Co. and respondent OCP each moved the Court of International Trade for judgment last week in a combined suit on the first review of the CVD order on phosphate fertilizers from Morocco (The Mosaic Co. v. U.S., CIT Consol. # 23-00246).

Mosaic took issue with Commerce's decision not to countervail two alleged subsidies: the Moroccan government's provision of mining rights to OCP for less than adequate remuneration and its provision of port services and infrastructure below cost.

Meanwhile, OCP faulted the agency for rejecting its minor correction related to a payroll tax refund from a Moroccan vocational training institution and instead applying adverse facts available. The respondent also challenged Commerce's de facto specificity finding related to reductions in tax fines and penalties the company received as well as the agency's request for information on "other benefits."

Mosaic said Commerce's failure to countervail the mining rights program "strains credulity, as the Mining Rights subsidy gives OCP the main raw material input for phosphate fertilizers (i.e., phosphate rock) essentially for free." The petitioner said that perhaps this finding is "unsurprising" because the agency failed to explain a "peculiar procedural constraint" it "imposed upon itself in this case."

In particular, Mosaic objected that Commerce set the deadlines for case and rebuttal briefs to run with under two weeks to go before the review's final results were to be published, and even held a hearing just six days before the end result was statutorily due. As a result, the agency had to review over 250 pages of briefings from four parties in a shortened time frame and "relied heavily on conclusory assertions that attempted to defend its unreasonable decisions, rather than engage meaningfully with the arguments before it," the brief said.

Regarding the mining rights program, Mosaic said Commerce committed two errors: it improperly included OCP's 2021 HQ/Support and 2021 debt costs in the cost buildup for phosphate rock and erred in including phosphate rock prices from Egypt, Syria and China in the benchmark while excluding data comparable to OCP's. On the port services issue, Mosaic said the agency failed to find that the Moroccan port authority's provision of port services was a de facto specific financial contribution.

OCP's first issue in its brief concerned the "small payroll tax refund" it discovered while preparing for verification. The respondent said it voluntarily disclosed the small refund as a minor correction at the onset of verification, though Commerce said the correction wasn't minor and imposed a 1.27% AFA rate. The respondent said this decision wasn't in line with the record evidence, against the agency's past practice and against the idea that there was a gap in the record. Commerce couldn't use AFA since OCP "acted in good faith and to the best of its ability throughout this review," the brief said.

The respondent also objected to the de facto specificity finding for the company's reductions of tax fines and penalties. OCP said the reductions were made under the Moroccan tax code, "which permits all taxpayers in Morocco to apply for tax fines or penalties leveled against them to be reduced." Noting the trade court's prior rejection of this very position held by Commerce, OCP said reductions of tax fines and penalties are nothing more than ordinary tax programs, making any de facto specificity finding on them "absurd."

Commerce also asked OCP to disclose any and all "other benefits" it received from the Moroccan government, despite lacking evidence the company received any other benefits, it said. The respondent said such an inquiry violates governing trade laws and that the agency "compounded its unlawful inquiry by requiring OCP to provide information regarding purported programs that Commerce has specifically found are not countervailable."