“We need a strong, diversified and resilient supply chain for electric vehicle batteries in the US so that we can meet the growing global demand for these vehicles and components – create well-paying jobs here at home and lay the foundations for the jobs of tomorrow.” “Biden said.” Today’s agreement is a positive step in that direction that will bring welcome relief to workers in Georgia and new opportunities for workers across the country. “
Background story: The ITC ruled in February that SK stole trade secrets from rival LG and placed a blockade on the supply of materials needed to make batteries at the plant. Although the ITC granted automakers a grace period to switch battery suppliers, SK threatened to abandon the project if the ruling was not overturned.
The ruling was a potential blow to Biden’s ambitious goals for electric vehicles. Although the ITC gave VW two years and Ford four years to find new suppliers, automakers said it would take them at least that long, potentially causing them to turn to imported batteries or delay their new model versions.
Federal law gives the President and the USTR 60 days to override any ITC decision, and the ruling sparked an intense lobbying campaign against the White House.
SK Innovation kept former EPO Administrator Carol Browner and former Assistant Attorney General Sally Yates to pressure Biden and Tai to overturn the decision. SK warned that Chinese battery suppliers could fill the void if they left the plant.
LG claimed that SK was bluffing and would likely quit the factory. And even if it weren’t, the abandoned plant would be quickly put into operation by another supplier who wants to meet the demand from automakers.
Settlement: Throughout the process, LG stated it was open to a deal that would allow SK to build its factory in exchange for compensation for stolen intellectual property.
On Sunday, the companies announced that SK would pay LG $ 1.8 billion as well as an “ongoing license fee” for batteries made in the factory. The companies did not respond to inquiries about license fees or the length of their license fees.
In return, LG agreed to settle the ITC dispute, a parallel case before the DC Circuit Court, and all legal issues in Korea, and promise not to sue SK over intellectual property disputes for 10 years.
Reaction: The deal is welcome news for the White House in Biden, which can now avoid a difficult decision in which swing state jobs violate its obligation to comply with U.S. trade laws.
If Biden had confirmed the decision, the Republicans would be ready to accept the possible loss of jobs. But if he had turned it upside down, the progressives would be ready to argue that he should also forego intellectual property protection for Covid vaccines that the White House has so far resisted.
Tai, whose office would have been tasked with deciding to overturn the ITC ruling, has urged companies to close a deal in more than a dozen phone calls with CEOs and other executives in the past few weeks, according to one person with knowledge of the conversations.
She also spoke to senior officials in the Biden administration and members of Congress, including those from Georgia, and Biden thanked her in his statement on Sunday for “working tirelessly to resolve this dispute.”
“I congratulate both companies for working through their significant differences in resolving this dispute, which increases confidence in their reliability and responsibility as a supplier to the US auto industry,” Tai wrote in a separate press release.
The deal was also welcome news for Georgia’s two new Democratic senators, who publicly urged companies to close a deal rather than pressuring the Biden government to overturn the decision.
Sens. Raphael Warnock and Jon Ossoff also rushed to appreciate the settlement on Sunday, saying they had spoken to battery company heads and the Biden administration repeatedly over the past few weeks.
“With the pending litigation between the companies, it has always been clear that the best way to protect trade workers – and the promised jobs for Georgians – is for the companies involved to negotiate an agreement in good faith,” Warnock said in a press release .