CVD Petitioner Urges CAFC to Reinstate Commerce's Attribution of Input Supplier's Subsidies to Exporter

Countervailing duty petitioner Rebar Trade Action Coalition said the U.S. Court of Appeals for the Federal Circuit has the authority to reinstate the Commerce Department's original determination attributing subsidies received by an exporter's cross-owed input supplier to the exporter itself (Kaptan Demir Celik Endustrisi ve Ticaret v. United States, Fed. Cir. # 24-1431).

The petitioner said in a July 15 reply brief that the "entire record of an appealed proceeding is before the Court when it conducts its review," and the entire record naturally includes the original determination, "regardless of how the lower court treated" that decision. Commerce's remand determination, in which it reversed the original attribution decision in the 2018 CVD review on Turkish rebar, "is clearly subject to this Court's de novo review," the brief said.

On remand at the Court of International Trade, Commerce said steel scrap supplier Nur isn't exporter Kaptan Demir's cross-owned input supplier, refusing to attribute Nur's subsidies to Kaptan (see 2311270059). The coalition appealed, claiming that it "matters little whether a supplying affiliate's business activities focused on generating a particular input, where those activities nonetheless generate the input, and the respondent uses the input to produce the subject merchandise, as was the case here" (see 2404030035).

The government responded, telling the appellate court that unprocessed steel scrap is a "common" input used in a variety of industries instead of existing as just a "link in the overall production chain" (see 2406120039). The U.S. said Commerce isn't obliged to follow any "blanket rule or precedent to treat steel scrap as primarily dedicated to downstream steel production."

In response, the coalition said it hasn't claimed that any "blanket rule" exists, but rather that Commerce's analysis of the relationship between the input and downstream good must be in line with the agency's regulations. The regulations indicate that the distinction between a "link" and a "mere ... link" rests on "how closely and directly the output product depends on the input product for its characteristics" and the degree to which the input is used across various industries and processes.

Steel scrap, per its relationship to rebar and like steel mill products, "is just the sort of good that the regulation and Preamble indicate is a 'primary dedicated' input," the brief said. The question isn't, as the government has framed it, a matter of how many downstream products the input "could eventually" be incorporated into "in some indirect fashion."

The U.S. analysis would "create an unworkable precedent with respect to steel scrap," the petitioner said. Steel scrap is made while producing "steel-intensive goods" and is a "byproduct" instead of a good that's made intentionally. However, it's also a "crucial input" in rebar. Allowing exporters like Kaptan to skirt countervailing duties by "separately incorporating their steel-intensive, scrap-generating production operations recreates the loophole" that Commerce meant to close in its regulations, the brief said.