A Strategic Foresight Look At American Fertilizer Producer The Mosaic Company’s Countervailing Duties (CVD) Case Against Morocco’s OCP and Russian Exporters

• The Mosaic Company has Russia’s and Morocco’s phosphate fertilizer subsidies investigated for Countervailing Duties (CVD) at the United States (US) International Trade Court (ITC)
• The Mosaic Company was likely utilizing strategic foresight capabilities due to the current trends in the global fertilizer market facing Morocco’s OCP and Russian Exporters
• The fertilizer import and export and supply situation in USA reveal that the uncertainties facing the global fertilizer markets are susceptible to geopolitical forces outside of the United States
• This writing serves a purpose to explain how legal case outcomes at the international levels affect industry trends that are concurrently altered by geopolitical forces — a paradigm shift in understanding global market scenarios

Crisis Response

In a move to possibly avert or manage disruption of the global fertilizer industry during the globl Covid-19 pandemic, an American fertilizer producer and exporter, The Mosaic Company, initiated a petition to have Russia’s and Morocco’s phosphate fertilizer subsidies investigated for Countervailing Duties (CVD).

The Mosaic Company argued that subsidies given to Morocco’s OCP and Russian exporters had unfairly harmed USA fertilizer industry producers, which was also judged based on factors that would substantially affect national security imperatives for food security and supply chain security.

When the United States International Trade Court (USITC) ruled in favor of The Mosaic Company, an association of farmers published their disapproval and objections to the final ruling. The farmers argued that these countervailaing duties imposed on Morocco’s OCP and Russian exporters would ultimately lead to higher tariffs on phosphate fertilizer imports to the USA from Morocco and Russia, which would in turn lead to higher costs for American farmers.

Assessing Global Fertilizer Market Factors

It’s probable that The Mosaic Company was utilizing strategic foresight capabilities, along with its predetermined judgements about domestic fertilizer supply in the USA, due, but not limited to, four factors at play in the global fertilizer market scenarios:

(1.) China would likely restrict its fertilizer exports due to domestic supply concerns during the government’s zero-Covid strategy to combat unexpected outbreaks of Covid-19 cases throughout China and ensure food security

(2.) Russia would likely restrict its fertilizer exports due to domestic supply concerns during the government’s reponse to unexpected outbreaks of Covid-19 cases throughout Russia, in addition to external geopolitical concerns, such as American and European sanctions on Russia in response to conflict escalation with Ukraine

(3.) Morocco would likely continue to increase its presence in the USA phosphate fertilizer market regardless of the USITC ruling because it is a critical market to Morocco’s global domestic product (GDP) and one of the key targets of Morocco’s largest company, OCP, to expand its operatons and supply chains to other areas of the world such as South America and Sub-Saharan Africa

All of these factors in the global fertilizer markets have added on to the global fertilizer shortage from 2020, and exacerbating a global food crisis around the world, giving new life to a concept called Fertilizer Diplomacy.

The Impact on USA’s Fertilizer Exports and Imports

It goes without saying that the global fertilizer markets are closely correlated with and subjected to the demand for global energy and commodities, particularly oil, gas and petrochemicals.

On the one hand, USA has been determined to detach itself from oil and gas import dependence from the Middle East, Russia and other global producers and exporters over the years. On the other hand, USA’s emergence as an oil and gas producer is favorable to USA’s domestic fertilizer production industry, and in ways that have and will contribute to prefereable outcomes for The Mosaic Company and other American producers and exporters of commodities.

Since the availability of oil and gas in the USA have been improved and more easily distributed to domestic producers, this circumstance will allow American fertilizer producers to focus more on the domestic market, allowing for a bigger trend that has transformed how the USA fertilizer industry operates, for both domestic and international markets, which has led to more preferable outcomes for The Mosaic Company and other American domestic producers and exporters.

Evidence in both the fertilizer supply situation in USA, and geopolitical forces causing the Russia-Ukraine conflict to escalate on February 24, 2022, reveal that The Mosaic Company was likely to be acting on strategic foresight capabilities when considering the future of its imports and exports in the phosphate fertilizer market.

From a strategic foresight perspective, the uncertainties facing global fertilizer markets have been and will be susceptible to geopolitical forces outside of the USA going forward. These uncertainties from geopolitical risks are affecting both the short-term outlook and long-term dynamics of global fertilizer supply and demand, causing supply shocks and a global food crisis.

As this trend coincides with rising prices for food and fertilizer, there should be greater scruinty by government and industry regulators on how these companies take advantage of the lack of fertilizer imports into the USA market. Morocco’s OCP is fighting back against the tariffs, while Russia is facing another CVD case at the USITC from CF Industries.

Washington D.C.-based international law firm Covington & Burling is representing Morocco’s OCP in their trade dispute case (ostensibly to appeal the USITC ruling) filed against The Mosaic Company. This case is still in the courts, but the outcome of this case should determine whether OCP still has any chance to succeed in the American market for their phosphate fertilizer exports.

Paradigm Shifts: Geopolitics and Global Market Scenarios

In conclusion, this writing serves a purpose to explain how legal case outcomes at the international levels (i.e. USTIC and ICJ) affect industry trends that are concurrently altered by geopolitical forces — a paradigm shift in understanding global market scenarios. I argue the best way to unpack this paradigm shift is to use a strategic foresight framework.

According to Dr. Amy Zalman, when companies act on scenarios they will be inclined to act on the ones with preferred outcomes for the company — a “preferred future”:

“You find some space in that wide realm of the possible that you’ve identified and you say, ‘You know what? We want to go there. That’s where we want to be in 2030. We want to be in that market’”

Covington & Burling is also representing Ukraine against the Russian Federation at the International Court of Justice (ICJ) and World Court, whereby Russia’s alleged claims of “genocide” and “racial discrimination” towards people of the Donetsk and Luhansk territories of Ukraine is at issue. In defending their positions, Russia has went as far as declaring these Ukrainian territories as “The People’s Republic of Donetsk” and “The People’s Republic of Luhansk”, which would be a major geopolitical shift in itself.

The upcoming international legal cases, for which Ukraine is being represented by Washington D.C.-based law firm Covington & Burling, means a great deal of significance for how the whole conflict between Russia and Ukraine is going to play out, because now the stakes of the conflict have been raised to higher levels of international court systems.

On March 3, 2022, the International Criminal Court (ICC) began their investigation into the alleged war crimes committed by the Russian Federation against “civilians” or “civilian objects” in Ukraine. This implies that Russia’s ongoing military invasion of Ukraine is being targeted with International Humanitarin Law, which shall apply to all actions committed in light of events dating back to Feburary 24, 2022.

Both the cases of The Mosaic Company vs. OCP and Ukraine vs. Russia equally demonstrate how legal case outcomes could affect industry trends. Looking at the crisis response from all actors, while assessing the global market factors and evaluting the impact on imports and exports, could provide insights on how future events would disrupt and change global markets.

Covington & Burling wrote as one of the main pillars of the firm’s practice: Strategic Foresight at the Intersection of Law and Policy. This means that one of the world’s largest international law firms are operating in countries where strategic foresight capabilities are essential to the company’s effective practice strategies and legal case outcomes.

With a solid strategic foresight framework, companies should be able to understand how global events and geopolitical forces affect their bottom lines, and how to properly manage paradigm shifts into the planning process for business outcomes of all shapes and sizes.