“The government provides unfair support to the steel industry, which uses a lot of electricity.”
Hyundai Steel Dangjin Steel Mill’s 2nd blast furnace. Hankook Ilbo file photo
The U.S. Department of Commerce imposed a countervailing duty on domestic steel companies, saying that Korea’s low electricity rates are in fact a subsidy to the steel industry. This is the first time that the U.S. government has determined that electricity bills are government subsidies.
According to the Ministry of Trade, Industry and Energy on the 5th, the U.S. Department of Commerce announced the final ruling that a 1.1% countervailing duty should be imposed on heavy plates (thick steel plates of 6 mm or more in thickness) exported by Hyundai Steel and Dongkuk Steel in September. A countervailing duty is a measure in which the importing authority protects its own industry by imposing a tariff on the item when an item exported through a direct or indirect subsidy by the exporting country causes damage to the importing country’s industry. An official from the Ministry of Trade, Industry and Energy said, “The countervailing duty related to electricity bills is 0.5%, but in addition to that, 1.1% was imposed in addition to free allocation of carbon emissions credits and financial support related to exports.”
In February, the U.S. Department of Commerce announced the results of a preliminary ruling that a 1.1% countervailing duty should be imposed on heavy plates produced by domestic steel companies. The Ministry of Trade, Industry and Energy and the industry tried to overturn this, but ultimately failed. The U.S. government made a preliminary ruling that countervailing duties should be imposed on coated steel sheets exported by Hyundai Steel in 2020, but the final ruling was canceled. For the first time in three years, they changed their position to say that Korea’s electricity rates amount to subsidies for the steel industry. This is interpreted as a result of the relatively small increase in electricity rates compared to other countries.
According to the International Energy Agency (IEA), Korea’s industrial electricity rate as of 2021 is $95.6 per megawatt hour (MWh), which is lower than the Organization for Economic Co-operation and Development (OECD) average ($115.5). It is only half of the level in major European countries such as the UK (USD 187.9) and Germany (USD 185.9). Due to the war between Russia and Ukraine, the wholesale price of electricity (SMP) per kilowatt hour (kWh) soared by more than 100 won from 94.34 won in 2021 to 196.65 won last year, but industrial electricity rates have only increased by 49.6 won a total of 5 times since 2022. .
An official from the Ministry of Trade, Industry and Energy said, “If you are dissatisfied with the decision, you can file a complaint with the U.S. International Trade Court and, if necessary, with the World Trade Organization (WTO). We plan to respond in consultation with steel companies.”
Yunju Lee Reporter [email protected]
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2023-10-05 11:30:25
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