Petitioner Tells CIT of Host of Issues in CVD Investigation on Korean Epoxy Resins
Countervailing duty petitioner U.S. Epoxy Resin Producers Ad Hoc Coalition on July 25 filed a complaint at the Court of International Trade challenging the Commerce Department's CVD investigation into epoxy resins from South Korea. The six-count complaint challenged, among other things, Commerce's alleged failure to use world price benchmarks in calculating the benefit from the provision of epichlorohydrin, a key epoxy resin input, and the agency's decision not to investigate the provision of certain chemical inputs for less than adequate remuneration (U.S. Epoxy Resin Producers Ad Hoc Coalition v. U.S., CIT # 25-00147).
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Regarding the provision of epichlorohydrin, the petitioner alleged that "massive overcapacity in China to" make this input "distorts Asian regional markets." The coalition said it provided "data regarding regional epichlorohydrin flows" and world price benchmarks. Due to this evidence of regional market distortion, "Commerce should have used the world price benchmarks in its calculations, as required by Commerce’s regulations," the brief said.
The petitioner added that Commerce "refused to investigate the provision of certain chemical inputs used" to make the subject resin on the basis that the coalition didn't make a "clear allegation" for each chemical. The coalition said this approach "unreasonably requires petitioners a priori to present detailed confidential business information about respondents’ production processes, information that ordinarily would be unavailable to petitioners but which would be developed by Commerce through its investigative process."
The coalition next argued that Commerce failed to find cross-ownership and countervail subsidies provided to respondent Kukdo's affiliated input suppliers. The petitioner said Kukdo is part of a "family-controlled conglomerate of highly interconnected companies operating together," four of which are the exporter's affiliated input suppliers that receive countervailable benefits. Despite ample evidence of the Kukdo Group's control "via a plurality shareholding far exceeding the shares held by any other person or group" and "a long history of actual operational control," the agency said Kukdo has "diversified ownership where no single entity may exert control to the extent that it meets Commerce’s cross-ownership threshold."
This finding was not backed by substantial evidence and applied a "threshold" not allowed by statute or regulation, the brief said.
The petitioner additionally argued that Commerce failed to fully account for losses in the benchmark for the provision of subsidized electricity. While Commerce found that Kukdo and respondent Kumho received subsidized electricity from the Korea Electric Power Corporation, the agency "then failed to ensure that the benchmark used to calculate the benefit from subsidized electricity included a rate of return sufficient to recoup KEPCO’s massive historical and ongoing losses, in disregard of Commerce’s regulations and established practice," the brief said.
Commerce also failed to account for losses sustained by six of KEPCO's subsidiaries, the petitioner added.