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US Department of Commerce to Lower Tariffs on POSCO Steel Sheets
Adjustment of Retaliatory Tariffs Expected
US Department of Commerce to Lower Tariffs on POSCO Steel Sheets
  • By Jung Min-hee
  • May 22, 2018, 11:51
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The U.S. Court of International Trade (USCIT) told the U.S. Department of Commerce to lower the tariff rate on POSCO's cold-rolled steel sheets.
The U.S. Court of International Trade (USCIT) has told the U.S. Department of Commerce to lower the tariff rate on POSCO's cold-rolled steel sheets.

The U.S. Department of Commerce provisionally decided to lower its retaliatory tariff on POSCO’s cold-rolled steel sheets from 59.72% to 42.61% following a ruling by the U.S. Court of International Trade (USCIT). Similar adjustments are anticipated as the court is looking into tariffs on many other South Korean products.

The 59.72% countervailing duty was imposed in 2016 on POSCO’s cold-rolled steel sheets. After that, South Korean steelmakers’ annual cold-rolled steel sheet exports to the United States almost halved to US$100 million or so last year. POSCO filed a complaint with the court immediately after the tariff imposition and the court told the department to recalculate the rate in March this year. The court is likely to examine the recalculated rate and determine whether to accept it in the second half.

The USCIT focused on the Adverse Facts Available (AFA) provision, which allows the department to arbitrarily impose an excessive tariff on an unfair trade investigation target when the former determines that the latter’s reply during an investigation is insufficient. This provision has been very frequently used by the department, driving a large number of South Korean exporters into a corner.

The USCIT put the brakes on the practice by ruling that the department should refrain from imposing ill-founded high tariffs, although it can determine the appropriateness of investigation targets’ replies.

Specifically, the USCIT accepted the department’s claim that it had no other choice but to resort to the provision with POSCO not revealing every data such as details of the raw materials supplied to POSCO from its subsidiaries. The court, however, made it clear at the same time that there are certain procedures for tariff rate calculation and the procedures should be observed in any case.

Much attention is being paid to whether the same ruling will be applied to other steel products. Back in 2016, the department imposed a retaliatory tariff of more than 60% on POSCO’s hot-rolled steel sheets, too. The steelmaker immediately filed another complaint as well, and the court ruling on the issue is likely to be made within this year. The other South Korean steelmakers’ business conditions can be improved once the USCIT rules that the tariff is problematic and this is because the department slapped the same tariff on Hyundai Steel’s and Seah Steel’s pipe products, claiming that the products used POSCO’s hot-rolled steel sheets as their raw material.

When it comes to non-steel industries, the department’s AFA-based high tariffs are currently on South Korean transformers, chemical products, and so on as well. Hyundai Heavy Industries brought the 60.8% tariff on its high-voltage transformer to the USCIT last year. Kumho Petrochemical followed suit with regard to the 44.3% anti-dumping tariff determined in July last year on its emulsion styrene butadiene rubber.

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