Commerce Legally Countervailed Korean Govt's Provision of Port Usage Rights, CIT Rules
The Court of International Trade on Aug. 21 upheld the Commerce Department's finding that the South Korean government's free provision of port usage rights at the Port of Incheon provided a countervailable benefit for exporter Hyundai Steel. Judge Jennifer Choe-Groves said that Commerce reasonably found it should conduct a revenue forgone analysis instead of a less than adequate remuneration analysis since Hyundai's non-payment of port usage fees involved a "type of financial contribution from revenue foregone" instead of the provision of services.
In its remand results, Commerce noted that the South Korean government contracted with Hyundai Steel to build the Port of Incheon. Part of the deal gave Hyundai the right to collect fees from third-party users of the port. The agency initially found in the 2018 review of the countervailing duty order on hot-rolled steel flat products from South Korea that the provision of the port usage rights was countervailable. Choe-Groves sent back that finding, telling the agency that it failed to review the non-payment of port usage fees "in terms of adequacy of remuneration" (see 2302100052).
Commerce came back to the court and said an LTAR analysis was not needed but that a revenue forgone analysis was (see 2304100033). The court bought this explanation, ruling that the non-payment of the port usage fees didn't involve a provision of a good or service but a type of contribution from forgone revenue, given Hyundai's right to collect revenue from third parties. Choe-Groves added that the agency reasonably found that the provision of the port usage rights conferred a benefit to Hyundai. The agency "cited substantial evidence" to back its finding, the judge said.
Choe-Groves also upheld Commerce's decision on remand to find that Hyundai's reduced sewerage usage fees did not constitute a countervailable subsidy. The agency asked for the remand after gaining an "increased understanding of how companies could receive a reduction in sewerage fees" under the Korean system. Under Korean law, sewerage fees are based on the volume of sewage discharged into the system, and so based on this, Hyundai's reduced fees reflected the volume of water it discharged and not the amount of water supplied.
No party challenged the results, leading the judge to find that "Commerce reevaluated applicable Korean laws, reopened the record to consider new information, and cited to sufficient record evidence to support Commerce’s remand determination." The result of the case was a slight reduction of Hyundai's subsidy rate, from 0.51% to 0.5%.
(Hyundai Steel Co. v. United States, Slip Op. 23-121, CIT # 21-00536, dated 08/21/23; Judge: Jennifer Choe-Groves; Attorneys: Brady Mills of Morris Manning for plaintiff Hyundai Steel; Tara Hogan for defendant U.S. government; Alan Price of Wiley Rein for defendant-intervenor Nucor Corp.; Roger Schagrin of Schagrin Associates for defendant-intervenors SSAB Enterprises and Steel Dynamics)