Commerce's CVD Analysis Over Korean Electricity Deprives US Companies of Proper Relief, Nucor Argues

The Commerce Department's finding that the South Korean government does not subsidize the Korean steel industry through the sale of electricity below cost was illegal and gives foreign governments full control to cross-subsidize various industries, plaintiff Nucor Corp. argued in a July 26 brief at the Court of International Trade. Commerce has failed to lay out a legal or methodological justification for treating the "government price" as the revenues earned by the Korea Electric Power Corporation (KEPCO) on all sales to all firms, the brief said. By doing so, the agency did not look at the price actually paid by the respondent, meaning it has failed to assess whether a benefit was conferred, Nucor argued (Nucor Corporation v. United States, CIT #22-00050).

The case concerns the 2019 countervailing duty administrative review on corrosion-resistant steel products from South Korea. During the review, Commerce ran a tier three benchmark and found that KEPCO provided electricity for less than adequate remuneration "under certain tariff classes" but ultimately assigned a non-measurable benefit amount. Commerce looked at KEPCO's overall cost recovery rates and found that while there was a benefit for certain sales under a particular tariff class, overall it recouped its costs plus a profit.

In its motion for judgment, Nucor argued that this analysis was illegal and unsupported by substantial evidence. Commerce itself explained that it did not base its benefit finding on the price charged by the government but rather on KEPCO's income and costs, and whether the income covers the costs plus profits. The record shows, though, that KEPCO charged, and the respondents paid, three different prices under each of the relevant electricity classes.

"Both Commerce and the courts have explained that the government supplier's overall financial performance is irrelevant to an adequate remuneration benchmark analysis," the brief said. "... Determining whether a benefit exists based on the government supplier's revenue from sales to all customers rather than based on the prices actually paid by the respondents also contravenes the 'fundamental basis for identifying and measuring subsidies under U.S. [countervailing duty] practice.'"

"Commerce's methodology gives governments carte blanche to engage in harmful cross-subsidization while depriving domestic industries of the relief to which they are entitled under the countervailing duty laws," Nucor argued. "... This is an absurd outcome that unlawfully washes away benefits to a respondent based on government revenues on sales to users and industries that are not under consideration in the proceeding."