Hyundai Steel Co. v. United States

In the Court of International Trade’s (CIT’s) review of the U.S. Department of Commerce’s results on remand from an earlier CIT decision regarding the 2019 administrative review of the 2016 countervailing duty order on hot-rolled steel flat products from the Republic of Korea, CIT sustained the U.S. Department of Commerce’s determination on remand that the Emissions Trading System of Korea’s (K-ETS’s) allocation of additional emissions permits satisfied the financial contribution element of a countervailable subsidy. The court also sustained Commerce’s finding that the additional allocation conferred a benefit on Hyundai Steel. The court remanded Commerce’s finding on the specificity element of a countervailable subsidy, directing the agency to reconsider or reexplain its finding that the subsidy is specific (i.e., limits access to the subsidy to an enterprise or industry) either as a matter of fact or a matter of law.

The U.S. Court of International Trade remanded the U.S. Department of Commerce’s (Commerce’s) final results of the 2019 administrative review of the 2016 countervailing duty order on hot-rolled steel flat products from the Republic of Korea. Hyundai Steel Company was the sole mandatory respondent for the 2019 review. Pursuant to the Korean government’s Emissions Trading System of Korea (K-ETS), greenhouse gas emissions permits are allocated for each annual compliance year, with a standard “gratuitous” allocation of 97% of permits for K-ETS participants but with “types of businesses” that met “international trade intensity” or “production cost” criteria receiving a gratuitous allocation of 100% of their permits. Commerce determined that the additional 3% constituted a countervailable subsidy (i.e., when “a foreign government provides a financial contribution … to a specific industry” that confers “a benefit” on a “recipient within the industry.” The court found that Commerce applied an incorrect interpretation of whether revenue “is otherwise due” and lacked substantial evidence “that the full allocation does not result in revenue forgone that is otherwise due.” The court therefore directed Commerce to reconsider its determination that the 100% allocation of permits was a “financial contribution.” The court said Commerce also could reconsider the basis for its “benefit” determination depending on its reconsideration of the “financial contribution.” The court rejected, however, Hyundai Steel’s claim that Commerce “impermissibly ignored the burdens imposed by the K-ETS program.” The court said the circumstances when environmental compliance is non-countervailable were not present in this case. The court also directed Commerce to reconsider its finding that the subsidy was specific as a matter of law.