Hyundai Says Korean Cap-and-Trade Program Not Meant to Skirt US CVD Law

Exporter Hyundai Steel continued to challenge the Commerce Department's finding that the South Korean government's cap-and-trade carbon emissions program was de jure specific, in comments on the agency's remand results filed at the Court of International Trade on June 13 (Hyundai Steel Co. v. United States, CIT # 22-00029).

On remand in a case on the countervailing duty review on Korean cut-to-length carbon-quality steel plate, Commerce again said that the program is specific to Hyundai Steel because it, as part of an industry that meets certain government requirements, received 100% of its carbon emissions allotment instead of 97% (see 2404170043). Commerce said the program expressly limited the 100% permit allocation to a specific industry since only industries with a certain level of international trade intensity or production costs qualified for the full permit allotment.

Hyundai said that in participating in the program, it, along with all other Korean companies required to participate in the program, has to "incur unwanted costs to reduce their carbon emissions," while U.S. companies aren't "subject to a cap and trade system and thus do not have to incur the same carbon reduction costs." To find this to be an unfair benefit to the Korean exporter "creates an uneven playing field whereby companies like Hyundai Steel have to incur carbon reduction costs that are not incurred by U.S. companies." This field is then "exaggerated by" imposing CVD on their goods, "which demonstrates the absurdity of countervailing the KETS program."

In response to this claim, Commerce said it doesn't factor in any effects pertaining to the "granting of the subsidy" when identifying a countervailable subsidy. To this, Hyundai said Commerce's analysis of the "substantiality of the evidence must take into account whatever in the record fairly detracts from its weight." The record as a whole here doesn't support that the purpose of the CVD law "would be thwarted" if the agency were to find the program to not be specific. There's no evidence the Korean government tried to skirt U.S. CVD law, the brief said.

Hyundai additionally said Commerce's specificity finding only shows that the Korean government applies the trade intensity and production cost criteria to find which "types" of business qualify. The trade court already said this doesn't show that the Korean government expressly limits access based on industry or enterprise. Contrary to the agency's claims, whether all industries will meet the criteria doesn't mean that the program is expressly limited to a given industry, the brief said.

Based on the relevant factors, "any large business could qualify for the 100 percent allocation regardless of the industry to which it belongs," Hyundai said. "Commerce’s determination that ‘not all industries will meet the criteria’ ... literally repeats ‘the truism that not all industries will "qualify under the criteria,"’ which the Court found insufficient to justify a finding of de jure specificity" already.

Commerce said that among the companies subject to the program, not all large businesses will get the full permit allotment, since not all businesses are mandated to take part in the program. Hyundai said this claim is a "non-sequitur," since by definition, the court's question on whether any businesses can qualify for the full allotment "does not apply to companies or industries that are not even subject to the" program.