Commerce Wrongly Found Joint Venture Was Not a Gov't Authority, CVD Petitioner Tells CAFC

The Commerce Department improperly found that Krakatau POSCO -- a joint venture between a private South Korean steel company and an Indonesian government-owned firm -- was not a government authority, leading Commerce to find its provision of cut-to-length steel plate below cost was not countervailable, the Wind Tower Trade Coalition said. Making its case to the U.S. Court of Appeals for the Federal Circuit in a March 28 opening brief, the coalition said that Commerce "effectively elevated form over substance, frustrated the intent of the CVD law" and allowed Indonesia's wind tower exporter to "escape duties" (PT. Kenertec Power System v. U.S., CIT Consol. #20-03687).

The case concerns the countervailing duty investigation on utility scale wind towers from Indonesia in which Indonesia's sole exporter to the U.S., Kenertec Power System, served as the sold mandatory respondent. In the CVD petition, WTTC alleged that Kenertec bought cut-to-length steel plate below cost. Kenertec said in the investigation that it only bought the plate from Krakatau POSCO.

The question then became whether Krakatau POSCO was a government authority and "entrusted and directed" the joint venture that sold cut-to-length plate below cost. Commerce said that it wasn't -- a position upheld by the trade court since the joint venture was 70% owned by the private Korean company POSCO (see 2112280046).

The Wind Tower Trade Coalition now contests this finding at the Federal Circuit, arguing that Commerce disregarded contrary evidence, made unsupported conclusions and "failed to articulate a satisfactory explanation for its action." In particular, Commerce failed to look at evidence that the Indonesian government through the state-owned Krakatau Steel exercised control of Krakatau POSCO through its board of directors and board of commissioners.

In the investigation, the coalition also alleged that cut-to-length plate producers in Indonesia received countervailable upstream subsidies via the Rediscount Loan Program that passed through Kenertec. During litigation at CIT, Commerce requested a remand to consider whether the Rediscount Loan Program was export contingent, ultimately finding that was not, preempting a countervailability finding. The coalition contests this as well at the Federal Circuit, arguing that Commerce had a statutory obligation to conduct an investigation into the upstream subsidy allegation.

"The statute requires Commerce, when it has reasonable grounds to believe or suspect that an upstream subsidy is being conferred, to investigate that subsidy," the brief said. "... By terminating the entire proceeding without conducting an investigation of Petitioner's upstream subsidy allegation, Commerce violated its statutory obligations. As a result, the Court should remand to the agency to (1) reopen the record of the proceeding and conduct a full investigation of Petitioner's upstream subsidy allegation; or (2) select another facts available rate to serve as Kenertec's upstream subsidy rate."