The Department of Commerce (“Commerce”) announced its preliminary determination in the less-than-fair-value investigation of welded line pipe from Turkey and Korea on May 15, 2015.  Commerce calculated dumping margins in Korea ranging from 2.52% to 2.67% for all manufacturers.  These dumping margins follow Commerce’s finding of de minimis countervailing duty margins for Korean line pipe producers in its March 20, 2015 preliminary determination (80 FR 14,907).  The margins are based on preliminary findings, and Commerce will have the opportunity to fully consider key arguments in this investigation for its final determination scheduled for early October.

One issue of particular importance is what affiliations should be found for companies forming part of Korea’s “chaebols.”  These conglomerates are common in Korea, but have a unique structure that is generally unlike that found in other countries, in that the members of the conglomerate are often not affiliated through direct financial ownership.  Yet, despite the lack of financial affiliation, companies that are members of a chaebol work together through strategic alliances that clearly define their roles and which are never violated.

Because there is no direct ownership, Commerce struggles in classifying chaebol members as affiliates for purposes of antidumping and countervailing duty calculations. As a consequence, the full impact of chaebol affiliations on Korean producers’ costs may not be fully reflected in the agency’s calculations. In particular, inputs and services obtained from chaebol members may be treated by Commerce as purchases from unaffiliated suppliers, despite the potential for chaebol membership to impact prices.

This issue is not unique to the line pipe investigation – it arises in nearly all investigations involving Korea, and has been a major source of frustration for U.S. producers seeking relief from unfairly traded Korean goods. Hopefully, in the final results of the line pipe case and in other, future investigations, we will see Commerce make further progress regarding its treatment of these unique affiliations.