Nucor Says Commerce Reasonably Compared Exporter's Share of Electricity Subsidy to Korean GDP
The Commerce Department reasonably compared countervailing duty respondent Hyundai Steel's share of the benefit received from subsidized industrial class electricity in 2021 with the company's share of South Korea's GDP for 2021 to assess the specificity of the subsidy, petitioner Nucor argued in Feb. 5 remand comments at the Court of International Trade. Nucor said the comparison was reasonable, since it "illustrates how Hyundai Steel is using more industrial electricity, and thereby receiving more of a benefit, than its corresponding share of the Korean economy" (Hyundai Steel v. United States, CIT # 23-00211).
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Last year, the trade court rejected Commerce's de facto specificity finding regarding the electricity subsidy in the 2021 administrative review of the CVD order on South Korean cut-to-length carbon-quality steel plate, finding the agency misinterpreted the meaning of the term "disproportionality" (see 2508190057).
Initially, Commerce assessed whether Hyundai received a disproportionate amount of the subsidy by grouping three unrelated industries together and finding that they disproportionally received the subsidy. CIT rejected this move, finding that disproportionality doesn't just mean the industries received a lot of the subsidy.
On remand, Commerce compared Hyundai's "share of total industrial class electricity consumed in 2021 to Hyundai Steel's share of Korea's GDP for 2021." Using figures that have been redacted, the agency said it found that "disproportionality exists as Hyundai Steel received more than expected of the electricity subsidy during the [review period]" (see 2512230066).
Nucor defended the move in its remand comments, arguing that in comparing the "relative amount of the subsidized input Hyundai Steel consumes (which corresponds directly with the relative amount of benefit received) with the relative amount Hyundai Steel contributes to GDP," one could expect the figures to "track closely, given the nature of the industry and input." However, here, the agency's analysis shows that the respondent's share of the input is "disproportionate to its contributions to the economy."
As a result, "Hyundai Steel is capturing a disproportionate amount of the industrial electricity subsidy relative to other Korean enterprises," Nucor said.
Commerce's use of Korean GDP as a comparator illustrates who the subsidy was "designed to benefit," the brief said. Undoubtedly, "some industries receive disproportionately less of the benefit from subsidized industrial class electricity and yet contribute disproportionately more to the Korean GDP," and the electricity subsidy was "clearly not designed to benefit those enterprises," Nucor said. Rather, it was designed to benefit "heavy users of the subsidized input, such as steelmakers."
"Commerce's use of GDP as a comparator is a reasonable proxy for making that comparison and illustrating that disproportionality," Nucor said.
The petitioner added that the record supports comparing industrial electricity use and GDP. For instance, in the Korean government's initial questionnaire response, "GDP" and "Industrial Structure" are two of only four factors underpinning the South Korean state-owned electricity provider's demand forecasts, the brief said. In addition, an "electricity verification report" submitted by the Korean government said that the Korean government's forecast data is based on "future sales that are influenced by gross domestic product."
As a result, "the state-owned entity providing subsidized industrial electricity to Hyundai Steel and the steel industry uses GDP in its demand forecast analysis, which renders Commerce's selection of GDP as an external comparator reasonable," Nucor said.