US Backs CVD Findings on Korean Electricity, Cap-and-Trade Programs

The U.S. in a Sept. 13 brief defended the Commerce Department's finding that the South Korean government's provision of electricity was de facto specific and also its decision to countervail the full allotment of carbon emissions permits under the Korean cap-and-trade program in the 2021 review of the countervailing duty order on carbon and alloy steel cut-to-length plate from South Korea (POSCO v. United States, CIT # 24-00006).

Regarding the provision of electricity, the government argued that Commerce reasonably found the subsidy to exporter POSCO was de facto specific because the steel industry, along with two other industries, consumed a disproportionately large amount of the subsidy. The agency found the South Korean government to be diversified with 19 industry groupings and that three of them received a disproportionate amount of subsidized electricity. The finding was based on electricity usage data from the South Korean government, including for the 10 largest electricity-consuming industries.

POSCO argued that the three industries Commerce based its decision on didn't get a disproportionately large amount of the subsidy and that the agency failed to identify a "logical" basis of comparison to support its finding. In response, the government said the statute's reference to the general term of "disproportionate" means that Congress meant to delegate the question of whether particular facts satisfy the statute's requirements to Commerce.

Applying the facts at issue, "Commerce reasonably found that a group of three industries -- out of 19 industries in a well-diversified economy -- received a disproportionately large amount of the subsidy," the brief said. POSCO also said Commerce "randomly grouped unrelated industries to achieve a desired result." In response, the U.S. said there's "no requirement for industries receiving subsidies to have shared characteristics to be considered as a 'group' for purposes of assessing specificity."

The government also defended Commerce's findings regarding the Korean emissions trading program, known as K-ETS. The program allots high-volume emitters credits for 97% of their carbon emissions in a given period, though it gives certain industries a full 100% credit allotment based on certain criteria. In the review, Commerce countervailed POSCO's receipt of its 100% credit allotment.

POSCO said the provision of the additional 3% of permits didn't confer a benefit. The U.S. said in response that Commerce reasonably found this additional allocation to confer a benefit since the exporter "was relieved of the requirement to acquire additional permits to comply with the emissions trading system."

On whether the program is de jure specific, the government added that POSCO is "incorrect in claiming the additional allocation is based on objective criteria that are neutral and do not favor one enterprise or industry over another. Instead, substantial evidence supports Commerce’s finding that the criteria favor certain industries because the allocation is limited to industries with high trade intensity or high production costs."