Commerce Properly Countervailed Korean Port Usage Rights Program, US Tells Trade Court
The Court of International Trade should sustain the Commerce Department's determination that the South Korean government's provision of port usage rights constitutes a countervailable benefit, the U.S. argued in a Sept. 15 reply brief. Responding to respondent Hyundai Steel, Commerce said, contrary to what the company says, there is no evidence to show that the period of port usage for which Hyundai does not pay fees was specifically calculated to match the costs incurred by Hyundai for building the port (Hyundai Steel Co. 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. At CIT, 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, eventually finding 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. But from 2003 to 2007, Hyundai had paid for and facilitated the construction of a port facility at the port, receiving reimbursements from the South Korean government. The company was also scheduled to receive berthing income from shipping operators along with "other" income from Hyundai itself and third parties. Hyundai received berthing income from shipping companies from 2007 to 2018.
In a motion for judgment, Hyundai argued Commerce had no legal footing to find the port usage rights were countervailable (see 2207270026). The respondent said the South Korean government merely compensated it for the construction costs and that the period of the port usage was specifically calculated to match the amount incurred by the respondent in building the port that the company said Commerce should offset from its benefit analysis.
In reply, Commerce said it has consistently not included an offset for the cost of constructing a port in its benefit analysis. Further, there is no record that Hyundai's period of port usage rights is specifically calculated to match the costs for the project, the agency said. "Commerce determined that Hyundai Steel received a benefit under this program because Hyundai Steel was able to collect berthing fees and other fees without transmitting those fees to the Government of Korea for 41 years and eight months, and further was exempt from paying any usage fees to the Government of Korea, thus resulting in a benefit having been conferred by the Government of Korea to Hyundai Steel pursuant to 19 U.S.C. § 1677(5)(E) and 19 C.F.R. § 351.503(b)," the brief said. "This is consistent with how Commerce has treated similar programs in prior proceedings."
Hyundai argued it is unlikely to recoup its investment and it has not collected certain fees from other entities. "It appears that Hyundai Steel may have made a business decision not to collect certain fees," the U.S. said. "But even though Hyundai Steel may have elected not to collect these fees, the income constitutes revenue foregone by the Government of Korea."