South Korea's Provision of Electricity to Hyundai Steel Not Countervailable, DOJ Says at CIT
The Court of International Trade should sustain the Commerce Department’s determination that the South Korean government did not subsidize Hyundai Steel by providing electricity for less than adequate remuneration (LTAR), the DOJ argued in an April 28 motion. The motion came in reply to requests for judgment filed by Hyundai Steel and consolidated-plaintiff Nucor, which contested separate aspects of the final results of a 2019 countervailing duty review on hot-rolled steel flat products from South Korea (Hyundai Steel v. United States, CIT # 22-00170).
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The suit was originally filed by Hyundai to contest the 0.56% subsidy rate that Commerce found was provided by the Korean Emission Trading Scheme (K-ETS). Nucor intervened and submitted subsidy allegations relating to the South Korean government’s provision of electricity through the Korea Electric Power Corporation (KEPCO).
Commerce lawfully countervailed the additional 3% allocation granted to entities in trade-intensive sectors, such as Hyundai Steel, the DOJ said. CIT has already upheld Commerce’s determination for similar emissions programs, and Hyundai has not given sufficient cause to depart from the court's previous decisions, it said.
In South Korea, companies that emit certain volumes of carbon dioxide are subjected to the K-ETS and given permits limiting the amount of emissions they can produce. Hyundai Steel contended that Commerce incorrectly found that this program provides a benefit, while Nucor argued that Commerce appropriately countervailed the provision of emissions credits.
Commerce undertook an LTAR analysis and examined whether the South Korean government set its electricity tariffs in accordance with market principles. South Korean responses and Commerce's examination of the Korea Power Exchange, showed that KEPCO fully recovered its costs, plus a rate of recovery or profit. Where industrial rates did not cover costs and a rate of return, Commerce found that there was still no measurable benefit.
Nucor argued that the methodology used by Commerce unlawfully limited its analysis to the aggregate performance of KEPCO rather than the prices actually paid by Hyundai Steel. However, the DOJ argued, because Commerce didn't have access to market-derived or world market prices for comparison, the agency used a "tier 3" not subject to the same restrictions. Further, CIT has agreed with Commerce on multiple occasions that the provision of electricity either resulted in no benefit or no measurable benefit, and there is no cause to depart from the court’s prior rulings, the DOJ said.