Hyundai Says US Improperly Relies on AK Steel in Countervailing Korean Port Program

Exporter Hyundai Steel Co. on April 26 said that the U.S. attempted to "shield itself under the blanket of" the U.S. Court of Appeals for the Federal Circuit's 1999 decision in AK Steel v. U.S. in its bid to countervail the Port of Incheon program in South Korea. However, AK Steel is "inapposite" for the present case since it came at a time before the existing Uruguay Round Agreements Act CVD statute and, as such, didn't contemplate the provision on what constitutes a countervailable benefit (Hyundai Steel Co. v. United States, Fed. Cir. # 24-1100).

Hyundai contracted with the South Korean government to build the Incheon North Harbor port, reverting ownership back to the government after construction was complete but receiving the right to collect fees from third-party users of the port as payment. Commerce countervailed the program, and the decision was sustained by the Court of International Trade (see 2308220031). The trade court said Hyundai's collection of berthing income from third parties represented forgone revenue for the Korean government.

The U.S. backed its finding on appeal by pointing to AK Steel -- a decision in which the Federal Circuit said exporter POSCO's exemptions from dockyard fees and similar collection of third-party fees at the Kwangyang Bay Industrial Estate port facility was a countervailable benefit (see 2404080057).

In response, Hyundai said AK Steel is a "decades-old case that does not address the statutorily enumerated 'benefit' at issue in this case" and is factually distinguishable from the present situation. The exporter noted that the pre-URAA version of the statue didn't have a benefit provision, so AK Steel fails to address the "statutory provision that lies at the heart of this appeal." In addition, since that 1999 decision, Commerce's imposed new regulations in which it established the regulatory provision on benefit that applied to the provision of rights issue here. "This renders AK Steel of limited relevance to the legal issue presented in this appeal," the brief said.

Commerce's practice has also evolved, as evidenced by its use of an "excessive benefit" framework in the proceeding on cold-rolled carbon steel flat products from South Korea. There, Commerce found that the Korean government conferred a benefit since it had given port usage rights for an "excessive period of time such that it was 'over-compensating or over-rebating'" the exporter. While Commerce looked at the length of time the exporter received port rights, it also looked at whether the length of port rights provided an excessive benefit, Hyundai said.

Hyundai added that the underlying facts in AK Steel are distinguishable since the record shows that the exporter pays the Korean government for its use of port, whereas POSCO received "free usage rights." The company said it didn't profit from or gain an advantage by building the wharf, claiming that nothing on the record or in Commerce's analysis shows that the reimbursements or collected fees went beyond the exporter's construction costs.