Commerce Flips on LTAR Electricity Finding for Korean Steel Exporter

The Commerce Department misidentified two South Korean government programs as countervailable subsidies, including one that it had previously deemed too unspecific, a Korean steel exporter said Feb. 5 at the Court of International Trade (POSCO v. U.S., CIT # 24-00006).

The exporter, POSCO, filed its complaint challenging the final results of the 2021 administrative review of the countervailing duty order on certain carbon and alloy steel cut-to-length plate from Korea, for which it was the sole mandatory respondent. The review resulted in POSCO receiving a 0.87% countervailing subsidy duty.

Among other things, the review examined the provision of electricity and carbon emissions permits to POSCO for less-than-adequate-remuneration, POSCO said. The LTAR electricity claim has been before the Court of International Trade before; in previous reviews, Commerce has upheld on remand a negative finding against challenges by petitioners (see 2401260056).

However, in the review at issue in POSCO's complaint, Commerce reached a finding that the South Korean government provided electricity at LTAR in a way that was de facto specific to POSCO “because the steel industry receives a disproportionate amount of the subsidy,” POSCO said. Commerce also found the Korean government was providing a benefit because “certain of its industrial tariff rates did not recover costs (inclusive of a rate of return),” the exporter said.

The department also found a countervailable benefit for a South Korean program that caps companies’ permissible carbon emissions on the basis of yearly permits granted by the government, called the Korea Emissions Trading System.

Under that program, all companies that emit a certain amount of carbon dioxide are given permits representing their maximum pollution allowance for that year. Companies that meet “certain production cost and international trade exposure” criteria receive 100% of their applicable permits, whereas those that don’t receive 90%, POSCO said. Any company that exceeds its pollution limit must purchase more permits.

POSCO received all of its permits during the period of review, the exporter said, but it claimed it had to purchase more from private parties “at significant expense” when it exceeded their limits.

Commerce found that the program was countervailable because POSCO received a financial contribution from revenue forgone by the government through the allocation of 100% of its applicable K-ETS permits, POSCO said. It said the department determined the program was de jure specific because it granted more permits to companies that met specified criteria.