Epoxy Resin Producers Support Countervailing of Korean Low-Cost Electricity Program
A U.S. epoxy resin trade group said Dec. 3 that the Commerce Department was right to find that South Korea’s provision of low-cost off-peak electricity was specific to the country’s chemical industry (Kumho P&B Chemicals v. United States, CIT Consol. # 25-00143).
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The South Korean electricity subsidy program, that involves state-owned utility company KEPCO, has been involved in a number of cases before the Court of International Trade. Most recently, CIT Judge Mark Barnett sustained Commerce’s refusal to investigate the program in relation to Korea’s steel industry, as the department had previously countervailed the program in several steel investigations and seen its decision reversed by the trade court (see 2503210064).
Commerce did countervail the electricity subsidy in its investigation, the trade group said. Attacking the program in the context of the chemical rather than steel industry, U.S. Epoxy Resin Producers said in its Dec. 3 brief that, though Commerce did correctly countervail it, the department underestimated the benefit KEPCO provided to Korean producers.
In particular, U.S. Epoxy Resin Producers said, the electricity price benchmarks Commerce selected were too low, failing to capture the amount KEPCO actually cost the Korean government.
It said KEPCO experienced “significant losses” in 2021. The losses “grew to ‘whopping’ record-setting levels in 2022,” it said, and then “grew yet again in 2023.” Commerce therefore should have added to its benchmark prices the amount KEPCO needed to earn back to make up for those losses, it argued.
In other words, it said, it “proposed that the benefit from not charging rates sufficient to recover KEPCO’s accumulated deficit be allocated across the four-year span in which the Government of Korea said that the losses should be recovered.”
U.S. Epoxy Resin Producers also said that Commerce “misconstrued” its argument that losses incurred by KEPCO’s subsidiaries should likewise have been included in the benefits calculation. It denied that the claim was an untimely upstream subsidy allegation. Rather, it said, it was arguing again that KEPCO should have set its electricity prices at a level that would have let it recoup its subsidiaries’ losses as well as its own.
And the trade group said that Commerce should have investigated and countervailed two other subsidies it alleged during the course of the investigation. It said Commerce wrongly ignored information showing that the mandatory respondents received two other chemical inputs from Chinese suppliers for less-than-adequate remuneration. The department did countervail respondent Kukdo Chemical’s purchases of Chinese-origin epichlorohydrin, another input (see 2512030055).