Steel Plate Exporter, South Korea Say Commerce Still Confusing 'Disproportionate' and 'Disparate' in CVD Case

The Court of International Trade remanded the review’s results in December, saying that Commerce, by pointing to the fact that the Korean steel industry was one of four apparently unrelated industries out of 10 that, together, were the four biggest users of the off-peak electricity program, didn’t provide a “rational basis” for its de facto specificity finding (see 2412170041). On remand, Commerce switched its grouping to only three industries.

But the department failed to actually follow the court’s remand order, which instructed it to explain how the steel industry’s greater overall consumption of electricity meant it received a disproportionate, not just disparate, benefit from Korea’s off-peak electricity program, the South Korean government said in its comments on the remand.

“To the extent Commerce provided any reasoning for why it grouped the three industries together, the justification ultimately is that the three industries are the top industrial users of electricity,” it said. “The Court already rejected this rationale for grouping industries together where the alleged subsidy is widely used, like electricity is in Korea.”

Essentially, Commerce “simply changed the number of industries it grouped together from four to three,” it said.

It said CIT told the department that, to be disproportionate, a subsidy must favor a particular industry “in some way (i.e., it receives more than its fair share).” Hyundai, in turn, noted that the court also looked to the dictionary definition of “disproportionate” as “having or showing a difference that is not fair, reasonable, or expected.”

But despite “clear instructions” from CIT, Commerce again focused on only disparate use of the subsidy by the handful of Korean industries that require the most electricity, the foreign government said.

Hyundai noted that, while CIT ordered Commerce to base its disproportionality analysis on “some other comparator” than solely the amount of benefit received by other parties, Commerce only technically provided a new comparator by “rejiggering its grouping of industries.”

Hyundai also said that Commerce’s new analysis was “muddl[ed]” because the department mixed up the review’s total electricity consumption dataset with its industrial electricity consumption dataset. Commerce also confusingly calculated “certain percentages” using only the top 10 electricity-using industries, and its only justification for doing so was a citation.

And despite Commerce’s “slippery slope” argument regarding its ability to countervail subsidies granted primarily to “large” industries, “the fact of the matter is that most cases before Commerce do not involve such a broadly available and widely used program like electricity,” it said. The department, it said, was raising hypotheticals not actually before the court.

A “recipient of a ‘fair share’ of a subsidy” might have “the largest ability to distort trade,” as Commerce claimed, but that didn’t mean the department could “sidestep the requirements of the statutory specificity provisions,” it said.

The off-peak electricity issue has been litigated in both directions in other proceedings. Petitioner Nucor brought a case in 2021 to try to force Commerce to initiate an investigation into the program in its 2018 countervailing duty review of South Korean carbon and alloy steel cut-to-length plate (see 2503210064). That case saw three remands before Court of International Trade Judge Mark Barnett finally sustained the department’s refusal to look into the subsidy.

Commerce then changed its tune in its 2021 review, the results of which are now being challenged by the exporter POSCO (see 2411050037). Hyundai’s case involves the department’s similar review of cut-to-length carbon-quality steel plate.