German Exporter Attacks Specificity Findings for German, EU Climate Change Subsidies in CVD Case

The Commerce Department erred in its de jure and de facto specificity findings in a forged steel fluid end blocks countervailing duty case on climate change compliance programs from the German government and the EU, exporter BGH Edelstahl Siegen argued in an April 20 reply brief at the Court of International Trade. The agency did not prove that the alleged subsidies were expressly limited to an enterprise or industry, precluding a de jure specificity finding, the brief said (BGH Edelstahl Siegen GMBH v. United States, CIT #21-00080).

The case concerns the countervailing duty investigation on forged steel fluid end blocks from Germany in which BGH and Schmiedewerke Groditz served as the two mandatory respondents. Commerce countervailed 10 EU and German government subsidies, which BGH argued were due to these governing bodies seeking to comport with international climate agreements and not to raise government revenue.

In its reply brief, BGH said that Commerce failed to prove that the subsidies were either de jure or de facto specific. For seven of the 10 subsidies, the agency held that they were only de jure specific, meaning they were expressly limited to an enterprise or industry. Commerce said that any measures that were not broadly available to all industries were de jure specific, with "all industries" meaning all industries in the foreign country "regardless of size, activity, consumption of electricity and fossil fuels or level of greenhouse gas emissions," BGH said. The plaintiff took issue with this position.

"According to Commerce’s determination, any non-uniform application of a climate change measure among all industries of the German economy triggers an automatic finding of de jure specificity," the brief said. "... Such an interpretation of section 1677(5A)(D)(i) is directly contrary to the clear meaning of the statute ... Accordingly, Commerce’s findings of de jure specificity with respect to each of the countervailed climate change measure are contrary to law and cannot be sustained."

For three of the 10 programs, Commerce said that they were de facto specific. When claiming this, however, the agency must establish specificity using four factors. In the investigation, Commerce only used one: that the actual recipients of the subsidy are limited in number, whether considered on an enterprise or industry basis. However, BGH argued that Commerce can only use this first factor alone when the number of enterprises using a subsidy is not large, which is not the case in the present investigation.