Trade Court Upholds Finding That Moroccan Tax Subsidy Isn't de Facto Specific
The Commerce Department reasonably found that a certain Moroccan tax subsidy isn't de facto specific, since it's widely available throughout the economy, the Court of International Trade held on Dec. 16. Judge Timothy Stanceu sustained Commerce's reversal of its specificity determination made on remand in a case on the 2020-21 review of the countervailing duty order on Moroccan phosphate fertilizer.
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The result of Commerce's remand results dropped the CVD rate for respondent OCP S.A. from 2.12% to 2.11% (see 2507010039).
In the review, Commerce said the Moroccan government's reductions in OCP's tax fines and penalties are de facto specific since OCP was a disproportionate user of the program given that it received a share of reductions that were around 900 times larger than those of the average user. The trade court previously rejected the agency's approach, finding it wasn't in line with the Statement of Administrative Action's (SAA's) limiting principle, "which sets forth that a broad-based, nationwide program does not satisfy the specificity requirement in the statute" (see 2504020035).
Under protest, Commerce flipped its specificity finding, determining on remand that the program isn't de facto specific and that the record doesn't provide a basis for finding de facto specificity based on any other statutory criteria.
The petitioner, The Mosaic Company, argued that the level of availability of the program doesn't preclude a de facto specificity finding. The petitioner said the original purpose of the specificity test was to serve as an "initial screening mechanism to winnow out only those foreign subsidies which truly are broadly available and widely used throughout an economy." Stanceu said this line from the SAA shouldn't be read in isolation, noting that the statute provided the example of a "tax credit for expenditures on capital investment even if available to all industries and sectors" as a non-specific, non-countervailable subsidy.
The judge noted that the "tax program at issue here is broader even than that example: the record shows that it was available not only to 'all industries and sectors' but also to the individual Moroccan taxpayers." Commerce didn't find that OCP "received some preferential treatment when participating in the program, nor did it find that the program was anything other than one that was used on a country-wide basis in Morocco," the court said. Thus, the agency didn't have a record on which it could validly find the program was "narrowly focused" or used by a "discrete segment of any economy."
The trade court also previously remanded the review on the basis that Commerce's disproportionality analysis wrongfully ignored "highly probative evidence" of OCP's relative size. Mosaic disagreed with this ruling, arguing that the text of the SAA doesn't require Commerce to consider the relative size of a subsidy recipient and that a finding that a subsidy is limited to a "discrete segment of the economy" isn't a prerequisite for a de facto specificity finding.
Stanceu said these claims "are not persuasive." While the statute doesn't specifically mention a subsidy recipient's relative size in addressing proportionality, "various indicia of a company’s relative size can be probative on that issue, as they were in this case," the judge said. The fact that the subsidy wasn't found to be confined to a "discrete segment of [the] economy" also was relevant, the judge said.
While Mosaic "selectively" points to evidence indicating OCP disproportionately received the subsidy, Stanceu said this wasn't the "only relevant record evidence." For instance, the record showed that the OCP Group had an "annual revenue that was equivalent to 6.6% of Morocco’s Gross Domestic Product" and that OCP "received a very small percentage of the total reductions granted to corporate taxpayers in 2021."
The agency wasn't compelled by the evidence to find that the "size of OCP's benefit was unrelated to the evidence constituting indicia of the company's relative size and its substantial role within the Moroccan economy," the court said.
(The Mosaic Company v. United States, Slip Op. 25-155, CIT Consol. # 23-00246, dated 12/16/25; Judge: Timothy Stanceu; Attorneys: David Ross of WilmerHale for plaintiff and defendant-intervenor The Mosaic Company; William Isasi of Covington for plaintiff and defendant-intervenor OCP S.A.; Sosun Bae for defendant U.S. government)