By Kim Tae-gyu



The U.S. Department of Commerce (DOC) slapped high anti-subsidy tariffs on POSCO's hot-rolled products last month because the company did not fully cooperate with a DOC probe, the DOC said in a recent email interview with The Korea Times.



Early this month, the DOC levied 57.04 percent countervailing duties — which are intended for when an exporter gets unfair government support — on POSCO's hot-rolled steel plates, while the penalty rate for its local rival Hyundai Steel was a mere 3.89 percent.



"Commerce found that the government of Korea did not provide electricity at less-than-adequate remuneration. As an adverse inference resulting from POSCO's non-cooperation on other matters, Commerce applied subsidy rates on POSCO for various other programs under investigation," it said in the email.



"These programs include the energy savings programs upon which Commerce initiated an investigation separate from the electricity for the LATR program." LATR is short for less-than-adequate remuneration.



Out of the 57.04 percent rates on POSCO, eight policies related to electricity price benefits accounted for 13.12 percent while 14 tax-associated programs explained 9.02 percent. A total of 11.48 percent was imposed due to seven kinds of support by state-backed banks while the remaining 23.42 percent is attributable to 15 other factors.



In response to POSCO's stance that the DOC decision was unprecedentedly unjust despite its sincere cooperation, the DOC countered by saying it "made its final determination in accordance with the U.S. statute."



"As explained in our final determination, POSCO did not act to the best of its ability to comply with requests for information as to cross-owned companies and Commerce concluded that the application of AFA was appropriate," it said. AFA stands for adverse facts available.



"Commerce also found that POSCO failed to report an R&D center located in a foreign economic zone and that POSCO's affiliated trading company DWI failed to report certain loans," the email said. DWI refers to Daewoo International.



POSCO argued that it had no obligation to report the cross-owned company at issue as its involvement was minimal.



But the DOC did not buy the explanation.



"POSCO claimed in its questionnaire responses that it had no cross-owned companies located in Korea that provided inputs to POSCO's production of subject merchandise. However, that claim was shown to be false during Commerce's verification of POSCO," it said.



"While Commerce may accept minor clerical error corrections at the beginning of verification, the discovery of POSCO's facility was neither a minor clerical error nor was it submitted at the beginning of the verification."



POSCO maintained its position that it will take all measures possible to clear up things with regards to the "unfair" DOC decision.



"The involvement of our related firms at issue is minimal to our production process. Under U.S. regulations, they are not classified as primarily dedicated input so we don't have to report them. We tried to submit evidence to a DOC inspector on this, who just rejected it for no good reason," a POSCO representative said.



"Then, the DOC dismissed all the other content of our report and imposed penalty tariffs to all subsidy programs. The DOC's countervailing tariff of 57.04 percent means nothing."



Last year, POSCO shipped 850,000 tons of hot-rolled steel plates to the U.S., which are used in automobiles, construction and heavy machinery.



