Change of Position
The U.S. Department of Commerce raised a question about cheap electricity rates through a preliminary ruling, saying, “The Korean government is actually subsidizing the Korean steel industry.” Even three years ago, U.S. officials thought that electricity rates in Korea were not subsidies, but now they have changed their position.
The U.S. Department of Commerce announced the details of a preliminary ruling at the end of February this year that the U.S. government should impose a 0.5 percent countervailing duty on Hyundai Steel’s thick plates, according to the Korean Ministry of Trade, Industry and Energy on April 18. A countervailing duty is a system in which a nation imposes a corresponding tariff when it is confirmed that its own industry is being damaged by subsidies from another country. In particular, the U.S. Department of Commerce pointed out that Korea’s cheap industrial electricity rates are playing the role of subsidies.
Earlier, in 2019, the U.S. Department of Commerce made an anti-dumping judgment on Korean plated steel sheets, saying, “There is a possibility that Korea’s electricity rates will be arbitrarily set.” But in 2020, it lowered the tariff rate, saying “Korea’s electricity rate system complies with market principles.”
The problem is that even after a sharp rise in energy prices, industrial electricity rates have dropped. The unit price of Korean industrial electric power has been lowered from 107 won/kWh in 2020 to 105 won in 2021. On the other hand, the electricity wholesale price (SMP) per kWh has soared from 68.87 won in 2020 to 94.34 won in 2021 and 196.65 won last year. Compared to other major countries in the world, Korea’s industrial electricity rates are low. Korea’s industrial electricity rate is US$95.6 per ㎿h which is half of that of major European countries such as the United Kingdom (US$187.9) and Germany (US$185.9).