Commerce Alters 'Disproportionality' Analysis Regarding Korean Electricity Subsidy
The Commerce Department stuck with its finding that exporter Hyundai Steel received a disproportionate share of an electricity subsidy in South Korea in the 2021 review of the countervailing duty order on cut-to-length carbon-quality steel plate from South Korea. Submitting remand results on Dec. 23 at the Court of International Trade, Commerce said it changed its analysis of Hyundai's proposed disproportionate use of the subsidy after rebuke from the trade court, but came to the same conclusion (Hyundai Steel v. United States, CIT # 23-00211).
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In August, CIT Judge Claire Kelly rejected Commerce's de facto specificity finding regarding the electricity subsidy, finding that the agency misinterpreted the meaning of "disproportionality" (see 2508190057).
To assess whether respondent Hyundai received a disproportionate amount of the subsidy, the agency grouped three unrelated industries and found that, together, they disproportionately received the subsidy. Kelly rejected the unexplained grouping of the three unrelated industries and said disproportionality doesn't just mean the industries received a lot of the subsidy. Rather, Commerce has to show that the select industry or company received an amount of the subsidy that is more than expected.
On remand, Commerce said it applied South Korea's GDP for 2021 "as a comparator to Hyundai Steel's consumption of industrial class electricity." Specifically, the agency compared Hyundai's "share of total industrial class electricity consumed in 2021 to Hyundai Steel's share of Korea's GDP for 2021." Using redacted figures, the agency said it found that "disproportionality exists as Hyundai Steel received more than expected of the electricity subsidy during the [review period]."
In comments submitted on Commerce's draft remand results, the Korean government argued that the agency's comparison is "unreasonable." The denominators for the two ratios the agency compared are "fundamentally different," the Korean government said. "Hyundai Steel’s share of industrial electricity consumption compares Hyundai Steel to certain Korean economic actors that contribute to only a portion of Korea’s total GDP, while Hyundai Steel’s relative share of Korea’s total GDP compares Hyundai Steel to the entirety of Korea’s economy."
Hyundai argued that the agency's analysis is "essentially meaningless, as there is no correlation between Hyundai Steel’s contribution to GDP and its consumption of industrial electricity." GDP measures the "total monetary value of all goods and services produced in a country and has no relationship to how much electricity the various enterprises that contribute to GDP consumed."