Russian Phosphate Exporters Provide Opening Arguments in Appeal of CVD Finding

Several Russian phosphate exporter filed the opening brief in its appeal before the U.S. Court of Appeals for the Federal Circuit on June 7. They argued that the Commerce Department’s de facto specificity finding regarding the Russian government’s provision of natural gas to them was incorrect, as their industry consumed only 4.7% of the total quantity of gas provided (The Mosaic Company v. U.S., Fed. Cir. # 24-1593).

The Court of International Trade initially held against exporters Phosagro, JSC Apatit and Industrial Group Phosphorite on the claim in September 2022 (see 2209020061). CIT Judge Jane Restani said that “when comparing only industrial users’ purchases” of the natural gas, “the record reflects that the agrochemical industry purchased a far greater amount than any other industrial user.”

But this leaves out all of the nonindustrial users of Russian natural gas, the appellants argued. They said it excluded other significant consumers, such as households and power generation.

“There was no statutory basis for Commerce to narrow its specificity analysis to only industrial users of natural gas,” the exporters said. “As Commerce recognized in its implementing regulations, where a subsidy is broadly available and widely used throughout an economy it cannot be found de facto specific.”

The exporters also took issue with the trade court’s finding that Commerce had selected the right natural gas price benchmark for their own context. The department, choosing to use a Tier 3 benchmark, relied on European prices without adjusting them for Russia’s market conditions, they said.

Commerce first erred by using an external Tier 3 benchmark without figuring out whether the government’s natural gas prices were “set in accordance with market principles through an analysis of such factors as the government’s price-setting philosophy, costs … or possible price discrimination,” the exporters said. But the department “summarily dismissed” doing this analysis, claiming that the Russian gas market is already distorted and a price consistent with market principles couldn’t be established, they said.

But Commerce did have adequate data to perform the analysis, they said. Both they and the government provided documents showing how prices are set and how one of the Russian agency’s prices receives a reasonable rate of return.

They said the department was also required to show that it had adjusted external price data to the context of the country under investigation, but that it hadn’t done so. At a minimum, it had to at least state that it didn’t think any adjustments were necessary, they said; but, they said, it didn’t. All it did note was that its data “reflect ‘the market dynamic in that market.’”

The European Union’s natural gas market is very different than Russia’s, they said. For example, they said, the EU “had to import a substantial -- indeed, enormous -- volume of natural gas in 2019, of which 44.7 percent was from Russia.”