New countervailing duty petitions filed against phosphate fertilizer imports from Morocco and Russia: Consequences for exporters and US importers

On June 26, 2020, The Mosaic Company filed petitions with the US Department of Commerce (DOC) and the US International Trade Commission (ITC) alleging that the governments of Morocco and Russia are providing unfair subsidies to producers and exporters of phosphate fertilizers in Morocco and Russia. The petitioner seeks the imposition of countervailing duties (CVD) on imports of phosphate fertilizers from Morocco and Russia. The petitioner alleges a subsidy margin of at least 71.5 percent for Morocco, and subsidy margins ranging from at least 11.42 percent to 30.72 percent for Russia.

Under US law, a domestic industry can petition the government to initiate a CVD investigation into alleged subsidization of foreign producers by a foreign government. Additional duties can be imposed if the DOC determines that imported goods are subsidized and if the ITC also determines that the domestic industry is materially injured or threatened with such injury by reason of the subject imports.

Products covered by the investigations

The products covered by the petitions are phosphate fertilizers in all physical forms (ie, solid or liquid form), with or without coating or additives such as anti-caking agents. Phosphate fertilizers in solid form are covered whether granular, prilled (ie, pelletized), or in other solid form (eg, powdered). The complete scope description from the petitions is attached.

The subject phosphate fertilizers are typically classified under subheadings 3103.11.0000, 3103.19.0000, 3105.20.0000, 3105.30.0000, 3105.40.0010, 3105.40.0050, 3105.51.0000, and 3105.59.000 of the Harmonized Tariff Schedule of the United States; and may also enter under subheadings 3103.90.0000, 3105.10.0000, 3105.60.0000, 3105.90.0010, and 3105.90.0050.

In 2019, the value of US imports of phosphate fertilizers from Morocco was $751 million, and the value of US imports of phosphate fertilizers from Russia was $315 million.

Foreign producers and US importers of phosphate fertilizers from Morocco and Russia

The petition identifies OCP Group as the sole producer of phosphate fertilizers from Morocco; and EuroChem Trading RUS and PhosAgro PJSC as producers of phosphate fertilizers from Russia. The petitions identify ten US importers of phosphate fertilizers from Morocco and Russia. The list of importers from the petitions is attached.

Estimated schedule of investigations

CVD proceedings are conducted pursuant to a strict statutory time schedule. Below is an estimated schedule for the CVD investigations on phosphate fertilizers from Morocco and Russia.

6/26/2020 – Petition filed

8/7/2020 – ITC preliminary injury determination

9/21/2020 – DOC preliminary CVD determination, if not postponed

11/23/2020 – DOC preliminary CVD determination, if fully postponed

2/15/2021 – DOC final CVD determinations, if preliminary determinations are fully postponed

4/1/2021 – ITC final injury determination, if DOC’s determinations are fully postponed

4/8/2021 – CVD orders published

Consequences for exporters and US importers

US CVD investigations can result in the imposition of substantial duties, in addition to other already applicable duties and tariffs. If the ITC and DOC make affirmative preliminary determinations, US importers will be required to post cash deposits in the amount of the CVD duties for all subject entries on or after the date when DOC’s preliminary determination is published in the Federal Register. In certain circumstances, such duty deposit requirements can go into effect retroactively, 90 days prior to the date of publication. The CVD duties will remain in effect if the DOC and ITC make affirmative final determinations and the DOC then issues a CVD order.

The DOC calculates specific CVD rates for certain individual producers and exporters. Such rates often can be much lower than those alleged in the petition. However, producers and exporters that do not participate in the investigations may be subject to CVD rates based on the sum of the highest rates calculated in the investigation (or in a prior proceeding, if no rates are calculated in the investigation) for each subsidy program (or a similar program, if there are no calculated rates for the same program). Duties imposed at such high rates can force exporters to stop shipping to the United States and importers to cease importation of subject merchandise. Thus, interested parties (including foreign producers, exporters, importers, and foreign governments) should consider participating in CVD investigations.

Under the statutory time schedule for CVD investigations, the first decision (the preliminary ITC determination whether there is a reasonable indication that the US industry is materially injured or threatened with material injury by reason of the subject imports) must be made within 45 days after the filing of the petition. An ITC hearing (public conference) is held about 21 to 23 days after the filing date. As a result, agency staff work begins almost immediately. Thus, a quick response is essential to understand the specific implications of this development and to prepare and implement a pertinent strategy.

Visit this page for information about the proposed scope of the investigation, and see the list of affected importers and exporters.  To learn more, please contact any of the authors.