The United States Court of International Trade (CIT) has ordered the Department of Commerce (Commerce) to revisit key aspects of its 2021 review of countervailing duties on Turkish rebar, a type of steel used to reinforce concrete. The case, *Kaptan Demir Celik Endustrisi ve Ticaret A.S. v. United States*, hinges on whether a Turkish steel producer, Kaptan, improperly received certain subsidies. The court’s decision, issued by Judge Gary S. Katzmann, focuses on several points of contention raised by Kaptan, the Turkish steel producer.
The court’s ruling primarily sustains Commerce’s findings in some areas but sends others back for further review or explanation. This means Commerce must either provide a more detailed justification for its original findings or reconsider them altogether. Let’s break down the key issues.
Specificity of the BITT Exemption
One of the central disputes revolves around an exemption from Turkey’s Bank and Insurance Transactions Tax (BITT). This tax is levied on foreign currency transactions. The Turkish government offers exemptions from the BITT for certain transactions, including those involving companies with an industrial registry certificate. Commerce determined that Kaptan’s BITT exemptions constituted a countervailable subsidy because they were specific as a matter of law. This means Commerce believed the exemption was intentionally limited to a specific group of businesses or industries.
Kaptan argued that the exemption is not specific because all industrial enterprises are required to obtain an industrial registry certificate. Therefore, the exemption is broadly available. The court sided with Kaptan on this point, remanding the issue to Commerce. The court found that Commerce’s reasoning for declaring the BITT exemption specific as a matter of law was not sufficiently supported by the evidence. The court noted that Commerce based its determination on the fact that the exemption is limited to those who make foreign exchange transactions, which the court stated is an extrinsic factor that could support a finding of specificity as a matter of fact, not law. The court has instructed Commerce to reconsider whether the BITT exemption is, in fact, countervailable and, if so, to justify its conclusion. This may involve examining whether the exemption is specific as a matter of fact.
Valuation of a Rent-Free Lease
Another point of contention involved the valuation of a rent-free lease of land provided to Nur, an affiliate of Kaptan. Commerce used a report by Colliers International to determine the value of the land. Kaptan, however, argued that a report prepared by Cushman & Wakefield (C&W) provided a more accurate valuation. The court, echoing a similar ruling in a related case, found that Commerce did not adequately address Kaptan’s concerns regarding the Colliers report. Specifically, the court noted that Commerce failed to fully address Kaptan’s arguments regarding the geographical limitations of the Colliers report. The court has remanded this determination to Commerce for further consideration. Commerce must either provide a more detailed explanation for its reliance on the Colliers report or reconsider its valuation.
Social Security Benefits Under Turkish Law 4447
Commerce also examined social security benefits provided under Turkish Law 4447. The court sustained Commerce’s approach in this instance. Commerce applied adverse facts available, meaning it used less favorable information due to Kaptan’s perceived lack of cooperation. Kaptan argued that Commerce’s application of adverse facts available was unsupported, but the court disagreed. The court found that Kaptan had failed to exhaust all the necessary arguments before Commerce, meaning it did not raise all relevant points during the initial review. Therefore, the court upheld Commerce’s decision regarding Turkish Law 4447.
Social Security Benefits Under Turkish Law 27256
Finally, the court addressed Commerce’s treatment of social security benefits under Turkish Law 27256. Here, the court sided with Kaptan, remanding the issue to Commerce. Commerce again applied adverse facts available, citing Kaptan’s failure to report these benefits. However, the court found that Commerce’s own regulations prohibited it from basing its determination on information that it had previously rejected as untimely. Since the information regarding Turkish Law 27256 came from rejected submissions, the court determined that Commerce’s actions were not supported by substantial evidence. Commerce must now reconsider its findings on this matter.
Next Steps
The court has ordered Commerce to file its redeterminations within ninety days. After that, the parties involved will have the opportunity to comment on Commerce’s revised findings. This case underscores the complex nature of international trade disputes and the importance of thorough documentation and adherence to established regulations. The court’s decision provides much-needed clarity on how Commerce must approach these types of reviews.