Hyundai Fights CVD Results Over Port Usage Rights and Sewerage Fee Reductions
Korean steel company Hyundai Steel's port usage rights and sewerage fee reductions are not countervailable benefits, with both stemming from unique arrangements that were not government subsidies specific to Hyundai, the company said in an Oct. 21 complaint at the Court of International Trade (Hyundai Steel Company v. United States, CIT #21-00536).
The exporter is challenging the final results of the 2018 administrative review of the countervailing duty order on hot-rolled steel flat products from South Korea in which it served as the sole mandatory respondent. In the complaint, Hyundai Steel explained the circumstances surrounding the two programs that Commerce found to be countervailable.
On the port usage rights, Hyundai Steel explained that between 2003-2007, it paid for and built a port facility at North Incheon Harbor, receiving reimbursement from the Korean government. The port changed hands after it was finished, officially reverting to the Korean government. But, since it built the facility, Hyundai Steel obtained the right to operate and use the port for its own operations, along with collecting fees from third-party users. The respondent told Commerce of this arrangement, also noting that it received berthing income from shipping companies.
On the sewage fee reductions, Hyundai Steel told Commerce that since it uses a lot of water for cooling machinery, a lot of water it consumes becomes vaporized in the cooling process, thus reducing its volume of wastewater. Because of this, Hyundai Steel got a reduction in its sewerage usage fees from the Incheon City government. The company was only charged for the wastewater that it puts in the Incheon City sewerage system, rather than being charged under a proportional system where a company is charged an equal amount to how much water it consumes. Far from being a Hyundai Steel-specific policy, the Korean government corroborated with Commerce that any company can opt to be charged in proportion to how much waste it produces rather than how much water it consumes, the complaint said.
After issuing its preliminary determination finding that both of these programs were in fact countervailable, Commerce then rejected that Hyundai Steel's right to collect usage fees at the port "should be viewed in light of Hyundai Steel’s substantial construction costs." Commerce also said that "none of the legal provisions in Korea cited by the GOK 'prescribe for the situation under which qualified Hyundai Steel qualified for its sewerage fee reduction, or the amount of the reduction received by Hyundai Steel.'" The result was a total CVD rate of 0.51% for Hyundai Steel -- just over the de minimis threshold.