Hyundai Steel Co. v. United States

The U.S. Court of International Trade (CIT) sustained the U.S. Department of Commerce’s redetermination that the allocation of 100% of credits to steel producers in South Korea’s cap-and-trade system for greenhouse gas emissions provided a “countervailable subsidy” to the producers that resulted in imposition of a countervailing duty order. The Commerce Department made the redetermination on remand from a December 2023 CIT decision that found that the agency did not adequately support its conclusion that the subsidy provided by the South Korean program was “specific” to a particular sector or industry, as required by the statutory definition of “countervailable subsidy.” CIT found that on remand the Commerce Department supported its determination that the South Korea greenhouse gas program criteria were de jure specific by explaining that the operational characteristics that determined eligibility for the subsidy (emissions intensity and dependency on international trade) were not neutral eligibility standards.

In cases brought by two South Korean steel producers, the U.S. Court of International Trade (CIT) remanded the U.S. Department of Commerce’s (Commerce’s) determination that the allocation of 100% of credits to the producers in South Korea’s cap-and-trade system for greenhouse gas emissions provided a “countervailable subsidy” to the steel producers that resulted in imposition of a countervailing duty order. The South Korean cap-and-trade system provides that certain business that meet “high international trade intensity” or “high production cost” criteria receive 100% of the “allowance units” assigned to the business, while other sectors that do not meet the criteria receive 97% of the assigned units. CIT found that substantial evidence supported Commerce’s determinations that the South Korean government had forgone revenue that it otherwise would have received and that provision of the free units conferred a benefit on the producers since their compliance burdens were reduced even if the overall cap-and-trade system imposed a burden on them. CIT further found, however, that Commerce did not adequately support its conclusion that the subsidy provided by the South Korean program was “specific” to a particular sector or industry, as required by the statutory definition of “countervailable subsidy.”