WASHINGTON (REUTERS) - South Korean battery makers LG Chem and rival SK Innovation have agreed to settle a trade secrets dispute that has threatened a key Georgia plant and the electric vehicle plans of Ford Motor and Volkswagen, three sources briefed on the matter have said.
The Biden administration through the US Trade Representative's Office (USTR) faced a Sunday (April 11) night deadline on whether to take the rare step of reversing a US International Trade Commission decision unless the companies had agreed a deal.
An announcement of the battery makers' settlement is expected by Sunday, the sources said.
The agreement is a win for US President Joe Biden, who has made boosting electric vehicles and US battery production a top priority. The global car industry is racing to develop electric vehicles (EVs), and Mr Biden has proposed spending US$174 billion (S$234 billion) to hike EV sales and expand charging infrastructure.
The accord puts an end to a bitter two-year dispute between affiliates of two of South Korea's biggest conglomerates. After losing out to SK in its bid to win Volkswagen orders, LG accused SK of stealing trade secrets by poaching nearly 80 of its employees.
The International Trade Commission in February sided with LG Chem after the company accused SK of misappropriating trade secrets related to EV battery technology and issued a 10-year import ban, but it allowed SK to import components for batteries for Ford's EV F-150 programme for four years, and Volkswagen's North American EVs for two years.
SK vowed to walk away from its US$2.6 billion Georgia battery plant under construction if the International Trade Commission decision was not overturned.
The International Trade Commission also faulted what it called SK's "egregious misconduct" and SK's destruction of documents ordered by company executives.
Ford, Volkswagen, LG Chem and SK declined to comment.
Volkswagen of America chief executive Scott Keogh wrote in a LinkedIn post on Wednesday that if the International Trade Commission decision was left in place, it could "reduce US battery capacity and delay the transition to electric vehicles".
LG first filed a complaint against SK in 2019 and both sides hired numerous lawyers and consultants to make their case to the Biden administration.
The administration has been pushing the two companies to try to reach a settlement, as have Volkswagen and Ford, the sources said.
US Trade Representative Katherine Tai has been personally involved in the settlement discussions and urged both companies to come to a resolution, sources said. USTR declined to comment.
SK in March received proposed terms from LG, including financial reparations to address LG's trade secrets misappropriation claims, Reuters reported earlier citing a person familiar with the situation.
Georgia is home to two newly-elected Democratic US Senators, Mr Raphael Warnock and Mr Jon Ossoff, who are a linchpin of Mr Biden's slim Congressional majority and have both spoken about the importance of ensuring the Georgia plant's future.
Both senators repeatedly pressed the companies to reach agreement.
Mr Warnock praised the reported deal that will ensure the Georgia plant's survival, saying in a statement on Saturday that it "will help keep the local economy moving forward".
Last month, Georgia's Republican Governor Brian Kemp urged Mr Biden to intervene, noting that SK's plant will employ nearly 2,600 and is the largest foreign investment in the state's history.
"Simply put, the livelihoods of thousands of Georgians are now in your hands," Mr Kemp said.
LG's battery unit LG Energy Solution is nearing completion of an Ohio cell manufacturing plant with General Motors and is close to announcing plans to build a US$2.3 billion second facility in Tennessee, sources told Reuters.
LG has said it can handle the battery needs of carmakers if SK abandons its Georgia plant.
SK has said LG could not handle the Volkswagen and Ford contracts, and that Chinese manufacturers could step in to meet demand.
