Slip Op. 02-97 UNITED STATES COURT OF INTERNATIONAL TRADE

BEFORE: CARMA N, CHIEF JUDGE

__________________________________________ : BETHLEHEM STEEL CORPORATION, et al., : : Plaintiffs, : : v. : : UNITED STATE S, : Court No. 00-03-00116 : Defendant, : : and : : POHANG IRON AND STEEL CO., LTD., : : Defendant-Intervenor. : __________________________________________: [ Remand Redetermination Pursuant to Bethlehem Steel Corporation et al. v. United States , December 6, 2001 is sustained.] Dewey Ballantine LLP (John A. Ragosta, Jennifer Danner Riccardi, Navin Joneja) , Washingt on, D.C., f

or Plaintif

fs. Robert D. McCallum

, Jr. , Assistan

t Attorne y G eneral ; David M. Cohen , Director, Commerci al Lit

igation Branch, Civil Divi sion, Unite d States De partmen t of Justice ; A. David Lafer , Senior Trial Counsel, Commercial Litigation Br anch, Civil Division, United States Department of Justic e; William L. Olsen , Trial At torney, Commerc ial Li

tigation Branch, Civil Division, U

nited State s Depar

tment of Just

ice; Michele D. Lynch , Attorney, Off ice of the Chief Counsel for Imp ort Admini stration, United Sta tes Depa rtment of Commerce , Of Counse l, Washingt on, D.C., f

or Defe ndant. Kaye Sch oler LLP (

Donald B. C

ameron, J ulie C. Me

ndoza, Bra dy W

. Mills) , Washington, D.C., for Defendant-I

ntervenor. Dated: August 27, 2002Court No. 00-03-00116 Page 1 O PINI ON

C ARMAN , C HIEF J UDGE : Bethlehem Steel Corporation and U.S. Steel Group, a Unit of USX Corpor

ation (“ Plaintiff

s”) and Pohang I

ron and Ste el Co., L

td. (“POSCO ” or “De fendant

Intervenor”)

challenge the Department of Commerc e’s (“Commerce”) determination in Remand Determination Pursuant to Bethlehem Steel Corporation, et al. v. United States, Slip-Op. 01-95 (August 8, 2001) (“

Remand Redetermination ”). This C ourt has j urisdicti on to hear this case pursuant to 28 U.S.C. 1581(c) (2000). For the reasons that follow, this Court sustains Commerce ’s Remand Redetermination in it s e nt ir et y.

B ACKGROUND On Augu st 8, 2001, this Court r emanded this case for Comme

rce to f urther in vestiga te and explain whether two programs by the Government of Korea (“GOK” ) provided countervailable subsidies to POSCO: 1) the direct provision of infrastructure at Asan B ay and 2) the reduction of import duties on steel slab by the GOK. See Bethlehem Steel Corp. v. United States , 162 F. Supp. 2d 639, 645, 648 (Ct. Int’l Trade 2001). I n the Remand Redetermination , Commerce

determined that th e infra structur e at Asan Bay does not pr

ovide a c ounterva

ilable benefit to POSCO and that although the import duty r eduction program is countervailable, POSCO received no measurable benefit from it. See Remand Redetermination at 4-5, 9.

I. Commerc e’s dete

rmination a

s to infrastr

ucture be nefits This Court remanded the issue of whether POSCO received infra structure subsidies atCourt No. 00-03-00116 Page 2

Asan Bay due to Commerce’s failure to properly address this issue, focusing instead upon whether POSCO’s lease terms constituted a countervailable subsidy

. See Bethlehem Steel , 162 F. Supp. 2d at 644. Commerce was instr ucted to i nvestig ate Plain

tiffs’ su bsidy allega tions as to roads, industrial water facilities, distribution depots and electric power stations at Asan B ay. See Bethlehem Steel , 162 F. Supp. 2d at 645. Commerce accordingly solicited and verified additional information on this issue. See Remand Redetermination at 2. With regard to POSCO’s presence in Asan Bay , Commerce had previously discovered that POSCO leased a port berth and maintained a warehouse at Asan Ba y. See id. Commerce verified that 1) the port berth “is not part of the Poseung I

ndustrial Complex, which is one of five industrial sites within Asan Bay” ; and 2) the Inchon Port Authority , rather than the government ag encies responsible for construction in the industrial site, was responsible for the port berths at Asan Ba y. Id. at 3 (citing Remand Verification Report for the Government of Korea (GOK) in the Court of InternationalTrade (CIT) Remand of the Countervailing Duty Investigation of Certain Cut-to-Length CarbonQuality Steel Plate from the Republic of Korea (Nov. 26, 2001) at 5-6, Pub. Doc. 258, POSCO’s Jan. 22, 2002 Pub. Attach. 4 at 4-5 (“ GOK Verifi cation Re port” )). As part of its investigation of roads at Asan Bay , Commerce verified that the bridge and major hig hway at Asan B ay

are par t of the West Coast Hig

hway sys tem conne cting two cities, thus constituting part of Korea’s gener al highway

and road system. Remand Redetermination at 3. The g overnme

nt agen cy Ministry of Constru

ction and Transportation ( “MOCAT” ) is responsible for the road sy stem. See id. (quot ing GOK Verifi cation Re port at 4, POSCO’s Jan. 22, 20 02 Pub . Atta

ch. 4at 3) . With r

espe ct to t

he ro ads within

the in dustr ial c omplex, Commerce verified they

are public roads used by

the general public. Furthermore , CommerceCourt No. 00-03-00116 Page 3

verified that “POSCO does not use most of the roads within the complex; rather, it uses the country’s g eneral road sy stem.” Remand Redetermination at 4. Comme rce con cluded PO SCO did not receive a financial contribution from the GOK with re gard to the highway and bridge at Asan Bay and did not receive a countervailable bene fit as to the roads within the industrial complex. See id. With reg ard to the

electri c power

stations, C ommerce

verifie d that the

electri city

is supplied by the national utility company KEPCO and the power plant is located near Kia in Asan Bay. See GOK V

erificati on Report at 6, POSCO’s Jan. 22, 2002 Pub. Attach. 4 at 5. It found that POSCO p ay s for ele ctricity service s based up on the app licable general tariff s chedule charged to all electricity

customers. See Remand Redetermination at 5. The same is tr

ue as to telephone and wa

ter serv ices, ev en thoug

h POSCO rec eives wa

ter from a treatment cent

er within the industrial estate. See id. It also verified that there a re no distribution depots constructed by the GOK at Asan Bay

that could provide a benefit to POSCO. See Remand Redetermination at 5. Commerce therefore concluded POSCO did not receive a financial contribution or countervailable benefit from water fa cilities, distribution depots, and electric power stations at Asan Bay

. See id.

II. Commerce’s determination as to reduction of import duties on slab The import duty reduction prog ram at issue in this case works as follows: Inter ested parties request reductions in import duties generally in response to market conditions. If they meet the criteria established in Korea’s statutes and r egulations, the government may approve a tariff reduction upon import. See CTL Plate Remand Questionnaire Response of the G overnmentCourt No. 00-03-00116 Page 4

of Korea (Sept. 7, 2001), at 11-13, Pub. Doc. 250, Def.’s Pub. Ex. 6 (“GOK Que stionnaire Response”). In the ca se of slab, “the Korean gover nment monitors the domestic supply of slab. When eithe

r the dome stic supply

drops bel ow a cer

tain thre shold or th e domestic industry so request s, the Kor

ean governmen

t reduce s the tari ff rate

on steel s lab. This r

educed tariff r ate is available to the entire steel industry , irrespective of the manner in which the individual companies ultimately use the slab[.]” Bethlehem Steel , 162 F. Su pp. 2d at 6 47 (footn

ote omitted). Commerce had found in the final results and first remand rede termination that the progra m is not cou

ntervai lable, bu

t this Court r

emanded the issue a second time beca

use Commerce had failed to investigate the prog ram. See id. at 641, 646. Upon solicitation and verification of additional information, Commerce found that the progra m could not

be class ified as a

n export sub sidy

because the appli cability

of the re duced ra

te was not conditioned upon the use of the slab in a product to be exported. See Remand Redetermination at 6. However, Commerce concluded that the prog ram is specific under section 771(5A) of the Tariff Act of 1930 . See id. at 7. It verified that the re duced rate of one percent had been applied to imports during the first part of 1998 but that the g eneral tariff rate of three percent had been applied during the second half of 1998. See id. at 8. POSCO had imported slab during the first half of 1998 at the one perce nt tariff rate. See id. Based on this information, Commerce found POSCO received a financial contribution and counte rvailable benefit for the first half of 1998. See id. at 8-9. However, Commerce found “POSCO did not receive a measurable benefit from this program a s the calculated benefit under this progra m was less than 0.005 percent and therefore had “ no impact on the ad valorem subsidy rate ca lculated in the final determination.” Id. at 9.Court No. 00-03-00116 Page 5 S TAND ARD O F R EVIEW This Court will sustain a final determination of Commerce unless it is found to be “unsupported by substantial evide nce on the record, or otherwise not in acc ordance with law.” 19 U.S.C. § 1516a(b)(1)(B)(i). The same standa rd of review applies to the review of a re mand determination as to the review of the original deter mination. See Laclede Steel Co. v. United States , 125 F. Su

pp. 2d 525, 530 (Ct. I

nt’l Tra de 2000) ; see also Viraj Group, Ltd. v. United States , 193 F. Supp. 2d 1331, 1335 (Ct. Int’l Trade 2002) (a pplying the substantial evide nce standard to review a remand determination). “ Substantial evidence is more than a mere scintilla. It me ans such r

elevant evidenc e as a re asonable mind migh

t accept as adeq

uate to su pport a

co nc lu si on . . . . Mo re ov er , [ t] he co ur t m ay n ot su bs ti tu te it s j ud gm en t f or th at of th e [ ag en cy] when the choice i s betwee

n two fair ly c onflictin

g views , even tho

ugh the court wo uld justifi ably have mad e a diff erent choice ha

d the matte

r been be fore it de novo .” Transcom, Inc. v. United States , 121 F. Supp. 2d 690, 693 (Ct. Int’l Trade 2000) (inter nal quotations and citations omitted). In examining statutes, the Court applies the two-part ana lysis of Chevron U.S.A. Inc. v. National Res. Def. Council, Inc. , 467 U.S. 837 (1984). See Fabrique de Fer de Charleroi, SA v. United States , 166 F. Supp. 2d 593, 598 (Ct. Int’l Trade 2001). Unde r Chevron , the Court examines whether the relevant statute addresses the spec ific question at issue, and if not, whether the agency ’s statutory interpre tation is reasonable in light of the overall statutory scheme. See Chevron U.S.A., Inc. , 467 U.S. 842-43.Court No. 00-03-00116 Page 6 D ISCU SSI ON I. Contention

s as to Counte

rvailabili ty of Infra

structure Benefits A. Plaintiffs’ Contentions Plaintiffs argue Commerce’s decision as to the counter vailability of infrastructur e subsidies should be reversed and remanded. (Pl.’s Dec. 17, 2001 B r. at 2.) They present three contenti ons in support of thei r argu ment. First, Plaintiffs argue Commerce based its conclusion upon irre levant factors. ( Id. at 8.) They asser

t that the fact “that POSCO’s facilities . . . are not located within a specific loca tion within the Asan Bay

site is irrelevant to the inquiry of w hether POSCO received infrastructure subsidy benefits at Asan B ay.” ( Id. at 9.) Plaintiffs also assert it is irrelevant whether the I nchon Port Authority

or some ot

her go vernmen

t agenc y is responsi ble for the port be

rths; in ei ther ca se POSCO is being provided a benefit from the GOK. ( Id. ) In addition, Plaintiffs state I nchon Port Authority is a division of the Mi

nistry of Mariti me Affa irs and F isheries , which do es play a role in the dev elopment

of the Pose

ung I ndustria l Complex, but

Commerce

did not inve stigate

its involvement. (

Id. at 9-10.) Second, Pl aintiffs

assert f aulty reasoni ng led to Commerce ’s deter

mination that POSCO did not receive a benefit from the provision of roads at Asa n Bay. ( Id. at 10.) They c ontend that Commerce only re ferred to a MOCAT report to support its finding that the highway and bridg e at Asan Bay are part of the gener

al infrastructure, and Commerce did not address the issue of the use of other roads “in and around” Asan B ay. ( Id. ) Plaintif

fs state, “The mer

e fact that these secondary roads, intended to benefit only a few, appear on a national roads pla n does not demonstrate that they were in fact intended to benefit society as a whole. . . . That the roadsCourt No. 00-03-00116 Page 7

appear on a national road s plan als o has no imp lications for whether or not their pr ovision wa s d e facto specific.” (

Id. at 11 (citing 19 U.S.C. § 1677(5A)(D)(1995)).) Plaintiffs maintain that while Commerce found the GOK recovers the c ost of constructing the roads by including it in the price of the land sold in the industrial estate, POSCO does not own land there and therefor e benefitted from use of the roads without pay ment. ( Id. at 11-12.) Plaintiffs maintain that Commerce improperly

relied upon the rationale that the public could, in theory, use the roads while they alleg e the public does not, in fact, use the roads. ( Id. at 12.) They ma

intain the roads

were no t constru

cted for the public

welfar e but rat her to de velop indu strial site s for sale to individual companies. (

Id. at 13.) Third, Plaintiffs argue that this Court previously rejected Commerce’s reasoning as to the

counter vailabili ty o f provisions of indus trial wa ter fac ilities, distribution d epots, an d electr ic power stations. Plaintiffs note that in reviewing the first remand, this Court stated the fact that POSCO paid c omparab le leasin g fees was not dis

positive o f whethe

r there was a co unterva ilable subsidy. (

Id. at 14 ( citi ng Bethlehem Steel , 162 F. Su pp. 2d at 6 44).) Pla

intiffs ma intain Commerce is again mistakenly focusing upon the fact that POSCO paid market rates for water, electric, and telephone services. ( Id. ) Plaintiffs argue instead that the salient issue is whether the particular infrastructure was built for the public we lfare. ( Id. at 15.) Pla

intiffs di stinguish discounts on servic es from infrastru cture be nefits by noting “ an infra structur

e subsidy benefit inquiry relates to the be

nefit received from the construction of the infrastructure. . . .” ( Id. at 17.) Plaintiff s reason that whet her the f acilitie s in question were s pecific ally

built for PO SCO is irrelevant because for there to be a financial contribution, all that is required is that the infrastructure not be for the public welfare . ( Id. at 15.)Court No. 00-03-00116 Page 8

In lig ht of thes e three

argume nts, Plainti ffs req

uest a re mand dire cting Co mmerce t o apply a .74 per

cent countervailing duty

rate, the rate Commerce calculate d as to the infrastructure benefits received by

POSCO at Kwangy

ang Bay . (

Id. at 18.)

B. Defendant’s and Defendant-Intervenor’s Contentions Defendant and Defendant-Intervenor support Commerce’s determination as to noncountervailability of infr

astructure subsidies with four contentions. First, to demonstrate that Commerce made its decision after a detailed investiga tion, Defendant-Inter

venor points to the remand questionnaires issued to the GOK and POSCO that address this Court’s concerns and Commerce’s four-day

“exhaustive” verification. (POSCO’s Jan. 22, 2002 Pub. Br. at 9-11.) Second, Defendant-I

ntervenor posits Commerce addressed whether POSCO rec eived a benefit from use of the roads in and around Asan B ay. ( Id. at 13.) It cites Commerce’s verification that POSCO did not use most of the roads in the industrial complex and that the roads within the industrial estate are public roads. ( Id. (citi ng Remand Redetermination at 4).) As to the secondary

roads, Defendant and POSCO assert Commerce found those roa ds to be part of the country’ s national highway system and that they

were built prior to the development of the industrial estates at Asan Bay . (POSCO’s Jan. 22, 2002 Pub. Br. at 13; Def.’s Br. at 7.) The bridge and highway

used to access Asan Bay were found to be part of the ge neral highway

and road system as we ll and are therefore exempt from the definition of a financ ial contribution. (Def.’s Br. 5-6.) POSCO states Commerce found that the public did in fac t use the roads. (POSCO’s Jan. 22, 2002 Pub. Br. at 14.) Third, De fendant

and Def endant- Inte

rvenor a rgue Commerce’ s decision that POSCOdidCourt No. 00-03-00116 Page 9

not benefit from industrial water facilities, distribution deports, and electric power stations at Asan Bay is supported by substantial evidence . Commerce verified that the water lines servicing Asan Ba y a lso servic e the popu

lations to t

he west a nd northe ast of Asa

n Bay and that t he wate r is being provided in the region betwee n the towns of Daesan and DanJim. ( Id. at 15-16.) Defend ant and D efenda

nt-I nterven or arg ue the wa ter fac ilities cle arly

were no t specifi cally

built to service POSCO or the steel industry. ( Id. at 16; Def.’s Br. at 10.) As to the electric power stations, Commerce verified that the electric power plant is not located a t Asan Bay

and that the plant was built many y

ears before the industrial estates at Asan B ay wer e developed. Therefore, Defendant and Defendant-I ntervenor argue the plant was not built to service only POSCO. (POSCO’s Jan . 22, 2002 Pu b. Br. a t 16-17; De f’s. Br . at 9.) I n addition , becau se POSCO pa id market r ate fee s for wat

er and e lectric ity, they

argue Commerce

correctly c oncluded

that POSCO received no benefit. (POSCO’s Jan. 22, 2002 Pub. Br. at 16, 17; Def.’s Br . at 9-10.) Fourth, Defendant-I

ntervenor argues Plaintiffs’ reque st for a directed remand to apply the subsidy rate of .74 perc ent is unsu

pported by r

ecord e vidence and is con

trary to law. De fendant

Intervenor consider

s this a “facts available” rate for whic h Plaintiffs have not offered any evidence to justify its application. ( Id. at 18-19.)

II. Commerce’s determination that POSCO did not receive a financial contribution and countervailable benefit from infrastructure subsidies is supported by substantial evidence or otherwis e in acco rdance wi th law. In or der for Commerce

to assess counter vailing duties upon investig ation of a subsidy, it must find that the subsidy is one in which an authority 1) provides a financial contribution to a person, 2) a benefit is thereby conferred, and 3) the subsidy is specific. See 19 U.S.C. §Court No. 00-03-00116 Page 10

1677(5)(A)-(B). I

n the present case, Commerce found that POSCO did not receive a financial contribu tion from t

he high way and bridge over A san Bay or from the industr

ial wate r facili ties, distribution depots, and electric power stations, and it did not receive a benef it from the roads within Asan Bay

. See Remand Redetermination at 3-5. Therefore, Commerce conc luded that the provision of infrastructure at Asan Bay was not a countervailable subsidy . This Court finds Commerce’s determination to be supported by substantial evidence or otherwise in accordanc e with law. The definition of a “financial contribution” includes “providing goods or services, other than gene ral infrastr

ucture .” 19 U.S.C. § 1677(5)(D)(iii) (emphasis added). Commerce’s regulations define “gene

ral infrastructure” as “infrastruc ture that is created for the broad societal welfare of a country

, region, state or municipality .” 19 C.F.R. § 351.511(d)(1999). The definition of a “benefit” includes a “case where goods or services ar e provided, if such goods or service s are pr

ovided for less tha

n adequa te remuneration . . . .” 19 U .S.C. § 1677 (5)(E) (iv); see also 19 C.F.R. § 351.511(a)(1). Commerce

properl y de termined that POSCO d

id not rec eive a c ounterva ilable be nefit from the roads within Asan Bay . As noted earlier, Commerce has verified that POSCO is not located within the industrial estates at Asan Bay

. See Remand Redetermination at 4 (citing Remand Verification Report for Pohang Iron and Steel Co., Ltd. (POSCO) in the CIT Remand of the Countervailing Duty Investigation of Certain Cut-to-Length Carbon-Quality Steel Plate from the Republic of Korea (Nov. 26, 2001), at 2, 3, Prop. Doc. 257, available at Def.’s Conf. Ex. 3 at 2-3). In response to Commerce ’s questionnaire, the GOK explained, “Up through 1998, the GOK’s major expenditures in and around the Asan Bay area were for the deve lopment of land forCourt No. 00-03-00116 Page 11

industrial sites that would be sold to individual companies, but it also constructed basic infrastructure such as roads, industrial water conduits and sewag e disposal facilities. . . . The infrastr ucture provided by the GOK . . . was cons tructed for the u se of all c ompanies located in the Asan Bay area. . . . [T]he roa

ds and indu strial wa

ter suppl y sy stems . . . w ere con structed to

cover a ll compan ies as well as the population located in Asan Bay area .” CTL Plate Remand Questionnaire Response of the Government of Korea (Sept. 7, 2001) at 2, Prop. Doc. 249, POSCO’s Jan. 22, 2002 Pub. Attach. 1 at 4 (emphasis added) (“GOK Questionnaire Response”). With regard to the roads in Asan Bay , the GOK informed Commerce that the Korean Land Development Corporation (“ Koland” ), a go vernmen

t investme

nt compan

y, i s respons ible for the land in the industrial estates and that the cost of roads constructed by Koland within the industrial estates is included in the sales price of land sold within the estate. See id. at 4, 8-9, POSCO’s Jan. 22, 2002 Pub. Attach. 1 at 6, 10-11. Where the GOK has constructed roads outside the industrial estates but still within the Asan Bay a rea, the cost is either recovered through tolls or, in some cases, the road is toll free. See id. at 9, POSCO’s Jan. 22, 2002 Pub. Attach. 1 at 11. The

GOK indic ated tha

t in addition to any

harbor u sage f

ees and l easing

fees, “POSCO paid fees or charges for the usage of facilities such as electricity, water, r oads, etc.” Id. at 8, POSCO’s Jan. 22, 2002 Pub. Attach. 1 at 10. The GOK emphasized that “all roads are part of the country’ s road and highway system.” Id. at 10, POSCO’s Jan. 22, 2002 Pub. Attach. 1 at 12. Commerce “verified that POSCO does not use most of the roads within the complex; rather, it uses the country’s g eneral road sy stem” and that “the roads within the industrial estate are public ro ads[.] . . . These roa ds are pu blicly travele d roads a

nd are us ed by

the public

and not jus t by POSCO.” Remand Redetermination at 4 (ci ting GOK Verifi cation Re port at 6, available atCourt No. 00-03-00116 Page 12

POSCO’s Jan. 22, 2002 Pub . Attach. 4 at 5). I t further verifie d that the

“second ary roads” i n Asan Bay are part of the national road and hig hways sy stem. See Remand Redetermination at 11-12 (citi ng GOK Verifi

cation Re port at Ex. GOK Remand 5, available at POSCO’s Jan. 22, 2002 Pub. Attach. 5 at 5-11). Based on this information, this Court holds Commerce’s decision that infrastructure subsidies from use of roads at Asan B ay are not countervailable is supported by substantial evidence

or otherwise in accordance with law. Commerce’s decision as to benefits from industrial facilities, distribution depots, and electric power stations is also supported by substantial evidence. As noted, the GOK informed Commerce that the industrial water supply system was constructe d for use by a ll companies as well as the general population in the Asan Ba y area . See GOK Questionnaire Response at 2, POSCO’s Jan. 22, 2002 Pub. Attach. 1 at 4. It submitted a map of the Asan I ndustrial Water Supply System which Commerce verified. See GOK Questionaire Response Ex. G-1 at 5-6, availab le at POSCO ’s Jan. 22, 2 002 Pub. Att ach. 1 a t 18-19 (“ Water Sy stem Map” ); GOK Verifica tion Repor

t at 6, POSCO’s Jan. 22, 2002 Pub. Attach. 4 at 5. The map shows that the system provides water

in the region between the towns of Daesa n and DangJim. See Water Syst em Map, PO SCO’s Jan. 22 , 2002 Pub. A ttach. 1 a t 18-19; GOK Verifi

cation Re port at 6, POSCO’s Jan. 22, 2002 Pub. Attach. 4 at 5. The Korea Water Resource Corporation, which services the water, is under the administration of MOCAT, which is also responsible f or construction of the water lines. See GOK V erificati on Report at 6, POSCO’s Jan. 22, 2002 Pub. Attach. 4 at 5. Based on the evidence submitted, it was rea sonable for Commerce to conclude that the w ater sy

stem was n

ot built spe cifical ly f

or POSCO an

d served to benef it all entit ies in the industrial estates as well as the population in the surrounding area . Therefore CommerceCourt No. 00-03-00116 Page 13

properly found the

re was no financial contribution by provision of the water facilities. Commerce ’s deter

mination that there

was also n

o counter vailable benefit to POSCO bec ause it paid usage fees at the marke t rate, thus providing adequate remunera tion for the benefit received, was also supported by substantial e vidence. See POSC

O Verification Repo rt

at 4, POSCO’s Jan. 22, 2002 Pub. Attach. 3 at 5; CTL Plate Remand Questionnaire Response of Pohang Iron & Steel Co., Ltd. (POSCO) (Sept. 7, 2001) at 3, Prop. Doc 249, POSCO’s Jan. 22, 2002 Pub. Attach. 2 at 5 (POSCO Questionnaire Response). Commerce

also foun d that to re ceive e lectric ity s ervice from KEPCO , all comp anies mus t make arrangements with KEPCO. See GOK V erificati on Report at 6, POSCO’s Jan. 22, 2002 Pub. Attach. 4 at 5. During verification Commerce found “ [t]here is a power plant that is located up near Kia. It wa s not recently built.” Id. POSCO pay s market r ate usag e fees f

or electric services. Remand Redetermination at 5; POSCO Ve rificationReport

at 4, POSCO’s Jan. 22, 2002 Pub. Attach. 3 at 5. Commerce’s determination that there was no financ ial contribution or countervailable benefit from infrastructure subsidies from electric power stations is therefore supported by substantial evidenc e or otherwise in accordance w ith law.

III. Contentions as to Countervailability of Import Duty Reduction Program For convenience, the Court first discusses the contentions of the De fendant-Interve nor as to the import duty reduction prog ram, followed by the

contentions of the Plainitffs and Defend ant. A. Defendant-Intervenor’s Contentions Defendant-Inte

rvenor contends this Court should reverse and remand Commerce ’sCourt No. 00-03-00116 Page 14

decision that the import duty reduction prog ram is countervailable for three rea sons. (POSCO’s Jan. 7, 2002 Pub. Br. at 1.) First, it argues the reduced ta riff rate “does not constitute a ‘financial contribution’ on exports of subject merchandise.” ( Id. at 8.) POSCO argues that regar dless of the duty rate on slab, the

re is no benefit from the program due to the e xistence of duty drawbac

k. ( Id. at 9.) Defendant-I

ntervenor insists Commerce failed to provide this Court with additional factua l finding s to suppor

t its decis ion that thi s progr am is coun

tervaila ble and a sserts the

only effect of the program wa s to reduce the amount of duty paid at import and consequently to reduce the amount of duty draw

back claimed upon exportation. ( Id. at 9-10.) Second, Defendant-I

ntervenor points to duty draw back received by

DSM, another steel company under

review, to show there was no “financial contr ibution.” (

Id. at 10-12. ) It a sserts Commerce incorrectly

ignored the fact that duty drawback was received a nd found the existence of a financial contribution and benefit despite the full refund of the duties. (

Id. at 1 2-1 3.) It maintains there was no financial contribution because “the GOK has no expectation of the ultimate payment of import duties under e ither the general tariff ra te or the reduced tariff rate.” ( Id. at 13.) Defendant-I

ntervenor therefore arg

ues the GOK did not forego revenue that was otherwise due. (

Id. ) Third, De fendant-Int

ervenor posits the only

benefit receiv ed from the import du ty reduction program was as to mercha ndise sold in the domestic market and that there was no countervailable benefit upon the export of the subject merchandise. ( Id. at 14.) Companies that imported a

t the red uced duty rate an d used the

subject me

rchandi se in prod

ucts sold d

omestica lly did not receive duty dr

awback and therefore bene fitted from the lower rate, but the companies that exported the product containing the subject merchandise g ained no benefit because theyCourt No. 00-03-00116 Page 15

received a refund of the duties they had paid upon import. (

Id. at 14-15. ) Thus De fendant

Inte rvenor c laims the b enefit f rom the imp ort duty

reducti on prog

ram is tie d to the domestic market of Korea. (

Id. at 15-16.) It maintains that this Court’s opinion in Bethlehem Steel did not instruct Commerce to find that the benefit from the progra m was not tied to a particular market or industry and that Commerce erred in failing to find ty ing in light of the evidence on the rec ord. ( Id. at 17.) POSCO acknowledges this Court’s statement that where a benef it associated with a domestic subsidy is not tied to a particular industry or market, Commerce will attribute the benefit to all products produced by a company. (

Id. at 13-14.) At the same time, POSCO argues Commerce’s reliance upon the statement was mistaken in that the Court specif ically stated it was not drawing any

conclusion about the countervailability of the program and that further investigation upon remand demonstrated that duty drawback was actually

received. (

Id. at 14.)

B. Plaintiffs’ and Defendant’s Contentions Plaintiffs and Defendant advance three a rguments to demonstrate that Commerce properly c ountervailed the import duty re duction program. First, Plaintiffs assert this Court previously rejec

ted POSCO’s claim and that the reduction of import duties on slab does constitute a financial contribution. (Pls.’ Jan. 22, 2002 Br. at 3.) Defendant states this Court provided explicit instructions concerning analysis of the program at issue and Commerce followed those instructions. (Def.’s Br. at 12.) Plaintiffs note under 19 U.S.C. § 1677(5)( D), a financial contribution includes “foregoing or not collecting revenue that is otherwise due,” and they arg ue under the program at issue the GOK f oregoes revenue that is otherwise due . (Pls.’Court No. 00-03-00116 Page 16

Jan. 22, 2002 Br. at 4 (citing 19 U.S.C. § 1677(5A).) Second, Pl aintiffs

counter this Court previousl

y r ejecte d POSCO’s a

rgumen t that duty drawback obviates the existence of a benefit. Plaintiffs cite this Court’s statement that the countervailability of the pr ogram depends upon whether it confer red a specific benefit on a particular company

or industry rather

than upon whether the steel slab was used in the production of subject merchandise. ( Id. at 5 (ci ting Bethlehem Steel , 162 F. Supp. 2d at 647).) Third, Plaintiffs maintain POSCO and DSM received a countervailable benefit fr om the import duty reduction prog ram. ( Id. at 5.) Plaintiffs explain that absent a showing of ty ing, the benefit from a domestic subsidy is attributable to all production, including exports and therefore there wa s a counte

rvailab le benef

it in the pr

esent ca se reg ardless

of the av ailability

of duty drawback. (

Id. at 6.) Plaintiffs provide “[d]omestic subsidies are countervailable because, eve n though their availability is not conting ent on export and they apply to products that may not be exported, producers of the subject merchandise are given trade-distorting competitive advantages that affect their entire operations.” ( Id. ) In addressing

POSCO’s assertion that the benefits of the import duty reduction prog ram are tied to a particular market, i.e. the domestic market, Plaintiffs contend “[t]ying . . . is an exception to the rule of f ungibility and requir

es very pa rticular findings.” (

Id. at 7.) Commerce did not find that such facts exist in this case. ( Id. ) Plaintiffs also assert that “a countervailable benef it is conferred despite the availability of duty drawba

ck on exported products.” (

Id. at 8.) Plaintiffs argue that rather than being concerned with the existence of duty drawba

ck, the issue of the second remand was the link betwee n the exemption of import duties and exportation. ( Id. at 9.) They ma

intain the link does not exist in this case. ( Id. )Court No. 00-03-00116 Page 17

IV. Commerc e’s dete

rmination t

hat the re duction of

duty rate s on the imp ortation of s lab is counterv ailable is s upported b

y substant

ial evide nce or is o therwise s upported b y law. Commerce

found tha

t 1) the imp ort duty

reducti on prog

ram admin

istered by the GOK is specific within the meaning of 19 U.S.C. § 1677(5A)(D)(iii), 2) POSCO rec eived a financial contribution through the program, and 3) POSCO rece ived a benefit but the benefit is not measurable. See Remand Redetermination at 7, 9. This Court affirms Commerce’s de te rm in at io n a s t o t he pr og ra m’ s c ou nt er va il ab il it y. Under Korea’s tariff sy

stem, a foreign government, domestic industry or importer may request a change in the g eneral tariff rate. See GOK V erificati on Report at 2, Def.’s Pub. Ex. 12 at 2. For a reduction of a tariff ra te to be approved, the requesting party must show that the reduction meets at least one of the system’s three criteria of 1) stabilizing inflation, 2) stabilizing supply and demand, and 3) adjusting imbalances in tariff rates among similar items. See id. at 3, Def.’s Pub. Ex. 12 at 3. The application for reduction was gra nted for the first half of 1998 but was rejected for the second half. See id. The GOK indicated to Commerce that as long as the criteria of the sy stem are met, “any imported product may be eligible for an import duty reduction for a particular period of time.” GOK Que stionnaire Response at 12, Def.’s Pub. Ex. 6 at 20. Additionally, Commerce verif ied “[t]here are no restrictions on items which are eligible for the quota reduction.” GOK Verifi cation Re port at 3, Def.’s Pub. Ex. 12 at 3. The availability of the duty reduction was not ba sed upon whether the slab was to be used in products that were intended for export; rather, the reduced rate was applicable to all imports of slab. Remand Redetermination at 6. Based upon this information, Commerce properly determined that the program could not be considered an e xport subsidy. See Remand Redetermination at 6; see alsoCourt No. 00-03-00116 Page 18

1 The program is also not an import substitution subsidy, which is def ined as “ a subsidy that is contingent upon the use of domestic goods over imported g oods, alone or as 1 of 2 or more conditions.” 19 U.S.C. § 1677(5A)(C).

2 In its brief, POSCO refers only to the duty drawbac

k received by

DSM as evidence that drawback was in fact rece ived. (POSCO’s Jan. 7, 2002 Pub. Br. at 10-12.) 19 U.S.C. § 1677(5A)(B) (“An export subsidy is a subsidy that is, in law or in fact, conting ent upon export performance, alone or as 1 of 2 or more c onditions.”). 1 However, Commerce properly determined that the program at issue provides a “ financial contribution” to POSCO in that the GOK received a lower tariff pay ment upon the importation of slab than it would have received if the progr am were not in effect. See Remand Redetermination at 8-9; see also19 U.S.C. § 1677(5)(D)(ii) (providing that “financial contribution” include s “foregoing or not collecting revenue that is otherwise due”). While POSCO claims there is no financi al contr

ibution be cause the GOK ha s not fore gone r evenue due to the

eligibil ity f

or duty drawba ck (POSCO’ s Jan. 7, 200 2 Pub. Br. at 9), POSCO itself ind icated in its respon ses to Commerce’s questionnaires that “POSCO did not claim duty dr awback.” POSCO Questionnaire Response at 5, Def.’s Pub. Ex. 6. 2 As previously noted by this Court, “[t]he mere availability of drawba ck . . . doe s not reso lve the iss ue of whe ther the import duty

reducti on prog

ram is countervailable.” Bethlehem Steel , 162 F. Su pp . 2d at 6 47. Commer

ce was r easonab le in finding that the GOK did forego the re ceipt of tariff duties at the three perce nt general rate which it would otherwise have been entitled to, thus providing a financial contr ibution to POSCO. Commerce also properly

found that POSCO received a benefit from this progra m. Under 19 C.F.R. § 351.510(a)(1), “[i]n the case of a progra m, other than an export program , that provides for the full or partial exemption or remission of an indirect tax or an import charg e, aCourt No. 00-03-00116 Page 19

benefit exists to the extent that the taxes or import charges paid by a firm as a result of the program are less than the taxes the firm would have pa id in the absence of the program.” 19 C.F.R. § 351.510(a)(1) (emphasis added). As to this reg ulation, this Court has already stated tha t “when a govern ment f

oregoes other wise l awful taxe s or im port c harges i t is p rovid ing a countervailable benefit. The only exception contained in the regulation applies to export progra ms – i.e., progra

ms that est

ablish exportation of

a finishe d produc t as a pre requisite to receiving an exemption of indirect taxes or import charge s.” Bethlehe m Steel, 162 F. Supp. 2d at 648. POSCO had the burden to present evidence demonstrating a link between eligibility for the import duty reduction and exportation of the produc t in which the slab was used. See RHP Bearings v. United States , 875 F. Supp. 854, 857 (Ct. Int’l Trade 1995) (stating respondents bear the burden of providing accurate information in a timely manner) . It presented no such evide nce, and base d upon the

informat ion it did pr

esent, Co mmerce f

ound that t

he reduc tion applie d to all imports of slab regardless of whether the slab was used in an exported finished product. Remand Redetermination at 6. Commerce determined that the import duty reduction program is a domestic subsidy and is specific pursuant to 19 U.S.C. § 1677(5A)(D)(iii). See Remand Redetermination at 7-8. The statute pr ovides as follows: Where there are reasons to believe tha t a subsidy may

be specific as a matter of fact, the subsidy is specif ic if one or more o f the foll owing f actors e xist: (I) The actu

al recip ients of the subsidy , whethe r conside red on an enterpr ise or industry basis, are

limited in number. (II) An en te rp ri se or in du st ry i s t he pr ed om in an t u se r o f t he su bs id y. (III) An enterprise or industry receives a disproportionately large amount of theCourt No. 00-03-00116 Page 20

su bs id y. (IV) The manner in which the authority providing the subsidy has e xercised discreti on in the de cision to g rant the subsidy indicate s that an e

nterpris e or industr y is favore d over others. 19 U.S.C. § 1699(5A)(D)(iii)(I)- (IV). I n the present case, Commerce verified that 68 of the 105 requests for tariff reductions in the first half of 1998, and 51 of the 107 requests in the second half of 1998, were approved by the GOK. Remand Redetermination at 7 (ci ting GOK Verifica tion Repor

t at 3, Def.’s Pub. Ex. 12 at 3). Commerce reasonably interpreted this rate of approval to show that the recipients of tariff reductions ar e limited in number. It also reviewed lists of items receiving tariff reductions between 1996 a nd 1998 and found the reductions to be “limited to certain industries, including the steel industry .” Id. ; see alsoGOK Questionnaire Response Ex. G-11, Def.’s Pub. Ex. 6. These findings, coupled with Commerce’s finding that the steel industry is one of the f ew industries consistently g ranted tariff reductions, justify Commerce’s determination that the import duty reduction program is specific. See Remand Redetermination at 7. POSCO arg

ues that the only

benefit from the i

mport subs idy

progra m comes fr

om sales in the domestic market that did not obtain duty draw back. (POSCO’s Jan. 7, 2002 Pub. Br. at 14- 17.) The refore POSCO mainta

ins the be nefit in th is case is tied only to a part icular ma rket - Korea. ( Id. at 16.) Despite POSCO’s argument, Commerce found, “the tar iff reduction on slab is applied to all

imports regardle

ss of whethe

r the slab is

used in the

productio n of produc ts sold in the dom estic or e

xport mar

kets .” Remand Redetermination at 6 (emphasis added). Thus receipt of the subsidy

is not conditioned or “tied” to the sale of the product in any particular market. The link between eligibility and sale in the domestic market is absent in this case. WhenCourt No. 00-03-00116 Page 21

there is a domestic s

ubsidy which is not tied to a p articula r market, the subs idy

is attribu ted to all products sold by a firm. See 19 C.F.R. § 351.525(b)(3). This Court holds that the determination of Commerce that the subsidy is counte rvailable is supported by substantial e vidence or otherwise in accordance with law.

C ONCLUSI ON This Court finds Commerce properly determined that 1) the provision of infrastructure benefit s at Asan B ay

by t he GOK is

not a coun

tervaila ble subsid

y a nd 2) the i

mport duty reduction program administered by the GOK is a countervailable subsidy . The Remand Redetermination is af

fi rm ed in it s e nt ir et y.

______________________________ Gregory W. Carman Chief Judge Dated: August 27, 2002 New York, New York