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April 12, 2021

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Boost for US as SKorea EV battery firms end trade spat

South Korean battery makers LG Energy Solution and SK Innovation Co agreed yesterday to settle disputes over electric-vehicle battery technology, avoiding a potential setback for United States’ EV ambitions.

The settlement by affiliates of two of South Korea’s biggest conglomerates came hours before a deadline for President Joe Biden’s administration to decide whether to take the rare step of reversing a US International Trade Commission decision.

In a statement, Biden called the settlement “a win for American workers and the American auto industry ... We need a strong, diversified and resilient US-based electric vehicle battery supply chain.”

The core dispute had threatened the EV plans of Ford Motor Co and Volkswagen AG, as well as a Georgia plant that is key to the growing industry.

The resolution is also a win for Biden, who has made boosting EVs and US battery production a top priority. The global auto industry is racing to develop EVs, and Biden has proposed spending US$174 billion to hike their sales and expand charging infrastructure.

SK Innovation agreed to pay LG Energy Solution, a wholly owned subsidiary of LG Chem Ltd, 2 trillion won (US$1.8 billion) — 500 billion won each this year and next, and royalties for at least six years.

“We expect our payment plan will not be financially burdensome,” an SK Innovation official said.

The companies agreed to drop all litigation in the US and South Korea and not to raise further lawsuits against each other for 10 years.

“The two companies now can coexist in the global market and compete in good faith,” LG Energy Solution said in a statement.

The US Office of US Trade Representative had faced a Sunday night deadline on whether to take the rare step of reversing a US International Trade Commission decision unless the companies had agreed a deal.

The Biden administration, Volkswagen and Ford had been pushing the Korean companies to settle, sources briefed on the matter said.

Trade Representative Katherine Tai was personally involved in the settlement discussions, urging the companies to come to a resolution, the sources said. “I congratulate both companies for working through their significant differences to resolve this dispute, which builds confidence in their reliability and responsibility as suppliers to the US auto industry,” Tai said in a statement after LG and SK announced the settlement.

In the bitter two-year dispute, LG lost to SK in a bid for VW orders, then accused SK of stealing trade secrets by poaching nearly 80 of its employees. LG filed a complaint against SK in 2019, and both sides hired numerous lawyers and consultants to make their case to the Biden administration.


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