One of the factories believed to help meet that demand is a $ 2.6 billion plant in Commerce, Georgia, built by South Korean battery maker SK Innovation. If the plant is completed, the company says, it will employ 2,600 workers and supply batteries for a suite of Volkswagen vehicles, as well as the electric version of the Ford F-150, the country’s most popular vehicle.
But the construction of the historic facility is threatened by an international trade dispute. The United States’ International Trade Commission ruled in February that SK Innovation had stolen trade secrets from South Korean rival LG Chem, and ordered the United States to prevent SK from importing components to make products. batteries. Although the independent agency has granted a two-year grace period for Volkswagen and a four-year cushion for Ford, SK says the decision will likely force it to abandon the plant.
This is where the White House comes in. Federal law allows the president and trade representative of the United States to overturn an ITC decision within 60 days – April 11 in the case of the battery.
“If the president doesn’t disagree with the ITC’s decision, I think it’s very difficult to envision SK remaining in the United States,” said Carol Browner, who served as an EPA administrator under the Clinton administration and White House climate chief under former President Barack Obama and now works with SK to pressure Biden.
The decision is particularly delicate for the Biden administration. Reversing the ITC decision would allow SK to finish its factory, leaving the president to boast of saving thousands of jobs in a swinging state he won by less than 12,000 votes and which went on to elect two Democrats. in the Senate, giving the party a razor. majority.
But rejecting the ruling would also undermine the intellectual property laws that the United States is fighting to enforce around the world. And the action would come as the White House resists calls from developing countries in the World Trade Organization to lift intellectual property restrictions on Covid vaccines – sending the message that saving American jobs justifies breaking the rules , while saving lives in developing countries does not.
Reversing the ITC decision may be necessary for the “prosperity of the American people,” but that argument “just as strongly applies” to vaccine dispensation, said an aide to Sen. Bernie Sanders (I-Vt.) , Which pushes the White House to issue the waiver.
“The prosperity and security of the American people is the primary concern of the US government, but we must recognize that our security is linked to the safety of people everywhere, especially in the event of a pandemic,” the aide said.
SK Innovation, Georgia Gov. and the state’s two newly elected Democratic Senators push president to reject ITC decision, warning Chinese companies could replace lost battery capacity if the plant is scrapped . China is by far the world leader in battery manufacturing today, with more than 90 major factories, compared to three in the United States, according to analysis firm Benchmark Mineral Intelligence.
“The United States will not produce enough of its own batteries over the next five years to make up for” the loss of the Georgia plant, said Simon Moores, Managing Director of Benchmark. “You’re going to have to import them, because the United States doesn’t have the capacity, and European battery sales go to European customers, so the only other place that’s left is China.”
Competition against China worries the White House, where Biden and senior energy officials are openly expressing concern over Beijing’s dominance in the sector. Last week, Energy Secretary Jennifer Granholm worried that China had “the corner of the market” on batteries and other clean energy components, like solar panels and computer chips.
LG Chem, owned by South Korean electronics giant LG Corp., says it’s nonsense. The company says it has not purchased any components or materials from China for its battery manufacturing in the United States since 2019. It also recently revealed plans to invest $ 4.5 billion in manufacturing new batteries in the States. -United, potentially including Georgia. Company executives say if LG doesn’t claim the SK site, another company will.
“Many investors and manufacturers … will be interested in the Commerce plant due to the increased demand for electric vehicle batteries,” LG CEO Jong Hyun Kim wrote last month in a letter to Senator Raphael Warnock. (D-Ga.).
Presidential action to overthrow the ITC is rare, but not unprecedented. Obama and his U.S. chief commercial officer, Michael Froman, did so in 2013 when they rejected a ruling that would have prevented Apple from importing older iPhone models that violated patents owned by Samsung.
Although federal law gives the President the power to overrule ITC rulings, the United States Trade Representative has had the final say on these matters since 2005.
The US Trade Representative’s office declined to comment beyond saying it is working with the White House and that the review will be completed “within the 60-day time frame provided by federal law.” But former officials say it’s a particularly sensitive issue for the agency’s new head, Katherine Tai.
“This is a very big deal,” said a former USTR official, who requested to remain anonymous due to continuing business with the agency.
SK’s investment in Georgia was “spurred in large part by the US-Mexico-Canada deal,” the source added, referring to the updated free trade agreement Tai helped bring about. shape as a member of Congress. And some USMCA compliance plans the agency approved for automakers were contingent on their access to SK Innovation batteries in Georgia.
Some new car and truck models may not qualify for duty-free treatment under the trade deal if they don’t have US-made batteries, added Kristin Dziczek, senior vice president of the Center for Automotive Research.
“All of these factors militate in favor of overturning the ITC order,” said the former USTR official, “but of course that is rarely done.”
There are also opposing considerations. In its ruling, the ITC reprimanded SK for destroying documents related to the business case, saying the action was “ordered at a high level and carried out by department heads across SK”. The commission also criticized Ford for doing business with SK, saying it “has deliberately chosen to continue to have a potential business relationship based on SK’s misappropriation of trade secrets.”
If the Biden administration overturns the ITC decision, it could send a signal to other companies that the United States will turn a blind eye to intellectual property disputes when jobs or other political goals are at stake.
“The United States has an interest in the consistent enforcement of intellectual property laws,” the former official said. “This will be a major challenge for the new USTR regime.”
Amid criticism from progressives, some veterans in the trade are disputing the comparison between Covid vaccines and the SK Innovation affair.
Former Trump trade adviser Clete Willems called this a “false equivalence,” saying India and other countries requesting the waiver “refuse to use” the licensing agreements already available to them for the purpose. weaken US intellectual property rules. But even if so, the comparison between the intellectual property cases “would certainly be a topic of discussion” in Washington if Biden dismisses the ITC case, the unnamed former USTR official said.
Businesses could still throw a lifeline at the White House. LG said it was open to a settlement that would allow SK to complete its plant in exchange for “compensation” for the stolen intellectual property.
It could also resolve a side case at the DC Circuit Court, where LG is suing SK. The two sides have so far been unable to agree on a deal, but trade officials have been pushing companies to the table since before Biden took office.
“This is definitely how we hoped it would end,” the former official said.