Steel Petitioner Defends Commerce's Grouping of Three Unrelated Industries for Korean Steel CVD Review
In a reply to Korean steel exporter Hyundai, steel petitioner Nucor Corp. said Oct. 24 that the Commerce Department, again, was right to base its determination of the de facto specificity of South Korea’s discounted off-peak electricity prices on the fact that three unrelated industries received a large portion of the subsidy (Hyundai Steel Co. v. United States, CIT # 24-00190).
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The reply comes in Hyundai’s challenge to the Commerce Department’s decision in the 2022 review of the countervailing duty order on cut-to-length carbon-quality steel plate from South Korea. Hyundai argues that the grouping of the three industries was unjustified and that the de facto specificity finding was based solely on the fact that they were, as some of the largest industries, receiving more of the subsidy.
Nucor said the Court of International Trade's decision in Bethlehem Steel, which Hyundai “rel[ied] heavily on,” didn’t help the exporter. In Bethlehem Steel, the trade court held that it didn’t make sense to base a finding of specificity solely on the fact that a larger user of a subsidy received more benefit than smaller users.
But Bethlehem didn’t involve the Korean government providing a service for less-than-adequate remuneration, Nucor claimed; the case, rather, considered a “voluntary curtailment” subsidy whereby enterprises received a standard price discount for voluntarily reducing their electricity usage by 20% or more.
While the value of that voluntary curtailment subsidy hadn’t changed from recipient to recipient, the same wasn’t true in this case, it said. That meant that it did make sense, in this case, to base a finding of disproportionality solely on the percentage of the benefit received by the steel industry.
“In this context, it is unreasonable to say that the consumption volumes of a beneficiary industry or enterprise are necessarily or inherently greater than that of other industries or enterprises,” it said. “That is because consumption volumes are directly tied to prices paid -- i.e., an industry or enterprise benefitting from an LTAR subsidy is likely to consume more of the subsidized input than it otherwise would in large part because it is being subsidized.”
And it said that Commerce’s regulations don’t require it to group industries based on some shared characteristic. The specificity analysis is meant to “ensure that subsidies that are distributed very widely throughout an economy are not countervailed,” it said. Specificity can be directed at subsidies that “are not widely distributed” because they are focused on a few specific industries, it argued.
It drew an analogy to a soccer team with a few star midfield players. Those players might not score “a predominant share of the goals,” but they might still score a disproportionate amount compared with the other 23 players, it said.
It also claimed that Hyundai was “inventing a requirement” that disproportionality findings must be based on something other than an industry’s use of a subsidy. That requirement would mean that Commerce would have to calculate an “‘in-country’ and electricity-class specific benchmark” so that it could determine whether Korean steel manufacturers received the subsidy at a faster clip than other manufacturers, it said.
And it argued that record evidence indicated certain other individual steel producers had received a disproportionate benefit from the program. Those individual producers consumed a significant amount of industrial electricity “in an economy of more than 400,000 manufacturing establishments,” it said, which provided “additional evidence of disproportionate benefit.”