Morocco’s fertilizer in danger of being locked out of US market by an anti-subsidy duty

MOROCCOMorocco’s phosphate fertilizer could soon be locked out of the US market if the United States Commerce Department imposes anti-subsidy penalties on Moroccan products.

 The US Commerce Department decided on July this year, to investigate whether producers of phosphate fertilizers in Morocco and Russia are receiving unfair subsidies.

If the US Commerce Department finds that subsidies on phosphate fertilizer imports from Morocco and Russia are harming or threatening American companies’ standing in the US market, it will impose import duties to offset such subsidies.

The investigation comes in response to concerns from American fertilizer company Mosaic and the US International Trade Commission’s (ITC) that such subsidies harm US producers and threaten the domestic industry.

Mosaic kicked off the US fertilizer market debate by filing a petition on June 26 that requested the “initiation of countervailing duty investigations” into phosphate fertilizer imports from Morocco and Russia.

Mosaic in its petition argued that government subsidies in Morocco and Russia give their phosphate producers unfair cost advantages.

Mosaic’s CEO in a statement said that the support that Moroccan and Russian producers received from their governments has been a long-term and increasingly injurious situation to the US manufacturers.

He further explained that Mosaic engaged in this process to demonstrate unfair trade practices by international competitors, adding that “Mosaic was not competing on a level playing field.”

From January to April of 2020, Morocco and Russia were the top exporters of diammonium phosphate (DAP) and monoammonium phosphate (MAP) to the US.

US imports of Moroccan phosphate fertilizers reached a total value of US$729 million in 2019, while imports of Russia phosphate fertilizers totalled approximately US$299 million.

Morocco is the second-largest phosphate mining country in the world after China and has an extraction capacity of 33 million tons.

Morocco also boasts the largest phosphate reserves at 50 billion tons, accounting for over 70% of global reserves.

Mosaic, on the other hand, with an operational capacity of 16.1 million tons, is the largest US producer of finished concentrated phosphates in the world.

OCP’s response to Mosaic was that the Moroccan group “operates in full compliance with all relevant laws and treaty obligations in relation to all sales of its products in the US market.”

A source from Morocco’s OCP told Reuters that, “In the unfortunate event of the imposition of a countervailing duty, OCP would be able to redirect its exports towards other markets.”

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