Commerce's Cross-Owned Input Supplier Analysis Surfaces in Separate CVD Case at CIT
The Commerce Department's recent remand decision not to treat a countervailing duty respondent's supplier as a cross-owned input supplier is relevant for exporter Kaptan Demir Celik Endustrisi ve Ticaret's case at the Court of International Trade, the exporter argued. Filing a notice of supplemental authority on Feb. 2, Kaptan said that Commerce's remand decision in Nucor Corp. v. U.S. is "at odds with Commerce's analysis in the instant case" (Kaptan Demir Celik Endustrisi ve Ticaret v. United States, CIT # 21-00565).
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Kaptan's case concerns the countervailing duty review on steel concrete reinforcing bar from Turkey covering entries in 2018. In the review, Kaptan listed Nur Gemicilik ve Tic as one of its affiliates since the ship building company sold scrap to Kaptan, though the respondent said that Nur could not qualify as a cross-owned input supplier because the amount was "extremely minuscule" compared with the amount bought from other suppliers (see 2110200026). Kaptan said the issue boiled down to figuring out if an input is "primarily dedicated" to the downstream product.
In its brief, the government said that this term can be looked at in two different ways: either the input is generally primarily dedicated to subject merchandise or a specific company's input production is almost exclusively dedicated to the respondent's production. The U.S. claimed that regardless of the nature of the input supplier's overall business activity or the amount sold to the respondent, as long as almost all of the input maker's input is sold to the respondent, then it is "primarily dedicated" to the respondent's production.
In Nucor, though, Commerce, on remand, stuck by its decision not to attribute to respondent POSCO subsidies that were received by its affiliate POSCO Plantec related to the provision of steel scrap (see 2302010042). Commerce held that Plantec's primary function was the construction of industrial plants and not a downstream product, meaning the agency could not attribute subsidies related to the sale of scrap to POSCO.
On remand, Commerce said that it looked at the facts and tried to figure out whether an input supplier made the input, whether the input could be used in the production of downstream products, whether the input is just a link in the production chain or is a common input among a wide variety of products, whether the downstream producers are the primary users of the input and whether an input supplier's production is "dedicated almost exclusively to the production of a higher value-added product." In its notice of supplemental authority, Kaptan said that these were not the criteria considered by the agency in its case.
In Nucor, Commerce also held a "fulsome discussion of the nature of scrap that is again missing from the instant case," Kaptan said. Lastly, the plaintiff railed against the agency's attempt to distinguish the analysis in Nucor with its decisions in the present case. Kaptan said that this analysis "should not sway the Court here in any way," since, unlike in Nucor, "Commerce neither considered the business activities of Nur nor the unprocessed nature of scrap."