Commerce Had No Legal Basis to Find Port Usage Rights Countervailable, Hyundai Tells Trade Court
The Commerce Department had no legal grounds to find that Hyundai Steel Company received a countervailable benefit from the South Korean government's provision of port usage rights, Hyundai argued in a brief at the Court of International Trade. Commerce ignored its own standard over port usage rights that says that these rights can be countervailed only if the benefit were "excessive," the brief said. The port usage rights afforded to Hyundai were given as payment for a debt to Hyundai and thus not a countervailable benefit, Hyundai argued (Hyundai Steel v. U.S., CIT #21-00304).
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The case concerns the 2018 administrative review of the countervailing duty order on corrosion-resistant steel products (CORE) from South Korea. Hyundai Steel challenged Commerce's finding that it received a financial contribution from the South Korean government with respect to sewerage fees and port usage rights. Previously in the action, Commerce requested a voluntary remand after it said it learned more about the sewerage fees program.
Under the program, the South Korean government charges sewerage fees based on how much water is provided to companies. However, a company can be granted a reduction if it can show it pumps out less water than it uses. Hyundai did just that, but Commerce thought the fee reduction was a countervailable benefit. On remand, Commerce reversed its decision, finding that the sewerage fees program is not countervailable (see 2204120028).
The remaining issue concerns port usage rights. It was alleged that Hyundai received a subsidy from a program involving the rights to use the Port of Incheon. From 2003 to 2007, though, Hyundai paid for and facilitated the construction of a port facility at the port, receiving reimbursements from the South Korean government. The company was scheduled to receive berthing income from shipping operators along with "other" income from Hyundai itself and third parties. Commerce found that Hyundai received a countervailable benefit relating to this "other" income -- namely, certain fees it received.
Now filing a motion for judgment, Hyundai argues that Commerce had no legal footing to find that the port usage rights were countervailable. There is no evidence that the port usage rights were excessive, meaning they don't clear Commerce's own standard of assessing duties on port usage rights. The respondent said that the 41-year and 8-month period for which the government said Hyundai could recoup its investment is "far shorter" than exemption periods Commerce has deemed excessive in the past.
"When this excessive benefit standard is applied, it is clear that Hyundai Steel’s port usage rights are not excessive and were calculated to last only as long as necessary for Hyundai Steel to recoup the costs incurred in constructing the port," the brief said. "Thus, under Commerce’s own standard, Hyundai Steel’s port usage rights are not countervailable."
The respondent further argued there is no legal basis to treat the rights as providing a countervailable benefit because they were provided as payment of a debt and not a "gift-like" fund transfer. "Hyundai Steel paid to build the port and then was required to revert ownership of the port to the [Korean government]," the brief said. "Receiving compensation for this taking of property is not a countervailable benefit to Hyundai Steel. Commerce erred in treating it as such and its arguments to the contrary rely on a distorted view of the program and inapposite cases."