Commerce Reverses Cross-Owned Input Supplier Analysis, Gives Turkish Exporter De Minimis CVD Rate

The Commerce Department said that, after reviewing the facts, ship building company Nur Gemicilik ve Tic., an affiliate of countervailing duty respondent Kaptan Demir Celik Endustrisi ve Ticaret, is not a cross-owned input supplier of goods primarily dedicated to the production of downstream products. Submitting its remand results to the Court of International Trade on July 24, Commerce changed its tune regarding why the input in question, steel scrap, was mainly dedicated to the production of downstream steel goods as part of the 2018 CVD review on steel concrete rebar from Turkey (Kaptan Demir Celik Endustrisi ve Ticaret v. United States, CIT # 21-00565).

The result of the finding is that Commerce no longer attributes the subsidies received by Nur to Kaptan Demir, dropping the countervailing duty rate for the exporter to a de minimis mark of 0.18%.

In the remand results, the agency first discussed the factors it considered when finding if Nur is a cross-owned input supplier of goods mainly dedicated to the production of downstream products, since neither the statute nor CVD regulations define "primarily dedicated." The factors include whether an input supplier made the goods, whether the input could be used in producing downstream goods including subject merchandise, whether the input is just a link in the overall production chain or just a common input among a wide array of goods, and whether the downstream producers are the primary users of the inputs.

Looking at these factors and case-specific facts raised by Kaptan Demir, Commerce said that the record does not support a finding that the steel scrap made by Nur is primarily dedicated to Kaptan Demir's downstream production. The agency said it has never made a finding that "steel scrap is always primarily dedicated to the production of steel," pointing to a host of prior rulings.

The agency said it is "apparent that the threshold factor of whether Nur produces the scrap at issue is satisfied," since there is no dispute that Nur makes the scrap when it carries out its main business activity of shipbuilding. Whether the input can be used in producing downstream products is also satisfied, the remand results said. Commerce further found that Kaptan Demir is the main and exclusive user of scrap provided by Nur.

The agency added that the evidence does not support the finding that Nur's scrap is primarily dedicated to Kaptan Demir's downstream production such that it is just a link in the overall production chain. Commerce said that unprocessed scrap is a "common input among a variety of products and industries and used in a variety of production processes." The input is also not the type of input that is just a link in the overall production chain, the remand results said.