CVD Petitioner Asks CAFC to Reinstate Attribution of Scrap Maker's Subsidies to Rebar Exporter
Countervailing duty petitioner Rebar Trade Action Coalition opened its case at the U.S. Court of Appeals for the Federal Circuit against the Commerce Department's decision on remand finding that shipbuilding company Nur Gemicilik ve Tic, an affiliate of respondent Kaptan Demir, is not Kaptan's cross-owned input supplier. Filing an opening brief on April 2, the petitioner said that Commerce originally got it right in cross-attributing Nur's subsidies to Kaptan in the 2018 CVD review on rebar from Turkey (Kaptan Demir Celik Endustrisi ve Ticaret v. United States, Fed. Cir. # 24-1431).
The Court of International Trade previously rejected Commerce's original decision in an administrative review on steel concrete reinforcing bar from Turkey, which said that "scrap" provided by Nur to Kaptan is an input primarily dedicated to the production of downstream steel products (see 2311270059). Judge Gary Katzmann took issue with the idea that scrap is primarily dedicated to rebar production, given evidence that the scrap may have been used to make goods other than rebar.
On remand, Commerce said that Nur shouldn't be treated as a cross-owned input supplier because the unprocessed steel scrap sold to Kaptan is a common input and that Nur's main business activity of shipbuilding was "far removed" from Kaptan's downstream steel production activities. The court sustained the remand results in November (see 2311270059).
The coalition would have the appellate court reinstate this original decision, because Commerce explained "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," the brief said. The agency interpreted its regulations as centering on the input maker's production of the input product and not its "operations writ large," the coalition said.
The petitioner added that the regulation doesn't require the downstream good to be the subject merchandise "uniquely and specifically." By not invoking the term, the governing regulation leaves open the chance that the products benefiting from the subsidy may include subject and non-subject merchandise, the brief said. The CVD preamble says that the "salient issue" is whether the input "by its nature, can be used directly to produce only a relatively narrow subset of goods and/or is a primary input into such goods," the brief said.
Scrap steel is used commercially only in making steel goods via remelting and is the main raw material in rebar. "As a result, it appears difficult to avoid the conclusion that steel scrap is not just 'a link in the production chain' for rebar, but one with a 'close physical relationship' to the rebar in which it is used," the coalition argued.
As an alternative claim, the petitioner said the agency's remand decision should be sent back again. Commerce's finding that "Nur's scrap has the sort of attenuated relationship with Kaptan's rebar that plastics have with automobiles or appliances is neither supported by the record nor adequately explained," the brief said. Instead, the record shows that the relationship between scrap and rebar is "akin to that of stumpage/lumber and semolina/pasta."
In addition, the agency "inappropriately focused on Nur's generalized 'business activity' over record evidence regarding Nur's production of steel scrap, and the relationship between steel scrap and Kaptan's downstream production," the coalition said.