US Backs Cross-Owned Input Supplier Analysis in Remand Comments at CIT

Countervailing duty petitioner Rebar Trade Action Coalition's attempt to undermine the Commerce Department's remand decision finding that ship building company Nur Gemicilik ve Tic, an affiliate of respondent Kaptan Demir Celik Endustrisi ve Ticaret, is not a cross-owned input supplier "fall[s] short," the U.S. said (Kaptan Demir Celik Endustrisi ve Ticaret v. United States, CIT # 21-00565).

Filing a reply brief at the Court of International Trade, the government argued that Commerce has "repeatedly emphasized" that its primarily dedicated analysis is "record-specific," making the petitioner's reliance on unique facts from earlier decisions urging a "blanket rule regarding steel scrap as an input" irrelevant. The trade court "emphasized the need for Commerce to look at the facts of this particular record that Commerce's reliance on" decisions in past segments "is misplaced," the brief said.

In its remand decision as part of the 2018 CVD review on steel concrete rebar from Turkey, Commerce said Nur was not a cross-owned input supplier of goods primarily dedicated to the production of downstream products (see 2307250051). The result was that the agency no longer attributes Nur's subsidies to Kaptan Demir, dropping the CVD rate for the respondent to a de minimis mark. The petitioner argued that the remand "inappropriately" focused on the nature of Nur's business activity over the evidence regarding Nur's production of scrap (see 2308240048).

In response, the U.S. said Commerce clearly explained that Nur's production process is "far removed from Kaptan's downstream product of rebar and involves a much higher-value product than the products Kaptan produces as a part of its downstream production." This finding backs the agency's conclusion that Nur's production is not dedicated almost exclusively to the production of a higher value-added product such that the purpose of a subsidy provided to Nur would be for the benefit of the input and the downstream goods.

The government said "a cross-owned input analysis is multifaceted, and, when examining a company’s business activities, Commerce considers both the nature of the input and the company’s entire production process." The idea that Commerce must consider the input production separate from the input supplier's business activity ignores key language in the statute "that the concern addressed by the regulations involves a 'situation where a subsidy is provided to an input supplier whose production is dedicated almost exclusively to the production of a higher-value added product,'" the brief noted.