Hyundai Tells CIT Its Port Rights Don't Let It Use Port Free of Charge, Not Countervailable
Countervailing duty respondent Hyundai Steel Co.'s port rights at the North Incheon Harbor do not let it use the port free of charge, making the Commerce Department's decision to countervail the port rights illegal, the respondent argued in an Oct. 27 reply brief at the Court of International Trade. The U.S. and CVD petitioner Nucor Corp. "misrepresent" the nature of Hyundai's port rights since it is not allowed to use the port free of charge and merely gets certain fees to help recoup its costs from building the port, the brief said (Hyundai Steel Co. v. United States, CIT #21-00304).
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The case concerns the 2018 administrative review of the CVD order on corrosion-resistant steel products (CORE) from South Korea. At CIT, Hyundai challenged Commerce's finding that it received a financial contribution from the South Korean government with respect to sewerage fees and 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 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.
"This case is straightforward," Hyundai said. The respondent built the port and was given the right to collect berthing income from shipping companies and harbor exclusive usage fees. It was not given free use of the port, since ownership transferred to the South Korean government on completion, and it was not made exempt from any other applicable fees. The fees it does collect were "calibrated so that Hyundai Steel would recover its costs and nothing more."
The U.S. and Nucor claimed that the Korean government gave Hyundai the right to use the port without paying port usage fees. Hyundai replied that the record shows that it does not have free use of the port and is not otherwise exempt from any fees associated with the port's usage. The respondent then broke down each relevant fee to demonstrate this claim. The company is not required to pay and is not exempt from ship fares since it is not a ship owner, though ship owners pay a ship fare to Hyundai rather than the government. The respondent pays cargo fees as owner of the cargo, and wharfage fees, though it does not pay terminal fees since the harbor is not a passenger terminal.
Hyundai also claimed that the record shows that the fees it did collect were meant only to recover its costs in building the port "and nothing more." Further, Commerce has no legal or factual basis to treat the fee collection rights as repayment of a debt as a countervailable benefit, the respondent claimed.
"Defendant’s argument selectively views the fees that Hyundai Steel has collected without appreciation for the costs that Hyundai incurred in building the port," the brief said. "The collection of these fees cannot be viewed in isolation from the exchange of which they are a part, and must be viewed as part of the overall program in its entirety."