Equity Infusions Not Countervailable, Korean Steel Producer Argues

The Commerce Department erred when it decided that debt-to-equity swaps as part of a corporate workout program for Korean steel manufacturer Dongbu were countervailable subsidies, the company said in an April 6 complaint at the Court of International Trade (KG Dongbu Steel Co. v. U.S., CIT # 23-00055).

Dongbu is challenging the final results of the fifth administrative review of the countervailing duty order on certain corrosion-resistant steel products (CORE) from Korea, covering entries in 2020. In that review, "Commerce reversed its consistent findings in the first, second and third reviews that the first through third D/E Swaps were not countervailable," resulting in a 9.47% CVD rate for DongBu, the company said.

Commerce said that it determined not to rely on the private investor prices for the first, second and third reviews, because they were not significant. "Based on the exact same evidence in prior reviews," Commerce found that the private creditors in the D/E Swaps were significant in the fourth review, Dongbu said. But the agency did not identify any new record evidence in this review to serve as the basis of its reconsideration of the countervailability of the swaps, Dongbu said.

Dongbu challenged that 2019 review, which assigned a 10.52% CVD rate to the company (see 2203170074). The case is still ongoing at CIT. In its questionnaire for the fifth review, Commerce noted that "Absent new information warranting a program reexamination," it would not reevaluate prior determinations regarding countervailability of programs.

Commerce’s determination that the first three D/E swaps provided a countervailable benefit to KG Dongbu was incorrect, Dongbu said, as was the agency's determination that any alleged subsidies from the first three swaps passed through from Dongbu to KG Dongbu despite the 2019 acquisition by the KG Consortium.