Joe Biden has welcomed an agreement between two of South Korea’s largest conglomerates to resolve a multi-billion dollar dispute that threatened to disrupt Ford and Volkswagen’s plans to build electric vehicles in the US.
The US president said the last-minute settlement between LG and SK’s battery-producing subsidiaries would be a “welcome relief” for workers in Georgia, a key battlefield state where SKI has invested $ 2.6 billion in a new battery factory. for electric vehicles.
The settlement came after the U.S. International Trade Commission hit a 10-year import ban on SK Innovation in February on allegations by its Korean rival of illegally acquiring sensitive technology. Had the two companies not come to an agreement on Sunday, the president would have had to decide whether to override the ITC ruling.
Biden said in a statement, “This settlement agreement is a victory for American workers and the American auto industry.” He added that the agreement would “bring some welcome relief for workers in Georgia and new opportunities for workers across the country.”
Under the agreement, SK will pay LG Won2tn ($ 1.8 billion) in cash and an ongoing royalty, the companies said in a joint statement on Sunday.
As part of the deal, the companies also agreed to drop all pending litigation and pledged not to file lawsuits against each other on this matter for the next 10 years.
The ITC ruling had allowed a grace period to give companies time to switch suppliers. But the industry had argued that the import ban would complicate automakers’ plans to market both electric and hybrid vehicles and ultimately delay the transition to eco-friendly vehicles.
German VW and US-based Ford are each contracted to purchase batteries from SKI’s new electric vehicle battery plant in Commerce, Georgia. The plant is being touted as the largest investment in the Southern state’s history, expected to provide 2,600 jobs and clean energy for 330,000 vehicles per year, including Ford’s all-electric F-150 truck.
The settlement also marks the latest turn in a years-long battle between two highly competitive South Korean chaebol that had become a shame for the Seoul government.
LG’s battery unit, formerly part of LG Chem, but has since been spun off into LG Energy Solution, accused SKI of falsely entering into lucrative contracts with the car manufacturers based on stolen technology.
The ITC lawsuit was launched after unsuccessful attempts at local courts.
SK has disputed the allegations and lobbied the White House to overturn the ban.
LG, for its part, last month announced investment plans of $ 4.5 billion in the US by 2025, generating more than 10,000 jobs, in an effort to allay fears about disruptions to the import ban on SKI.
The ITC has also accused Ford of pursuing its deals with SK, despite evidence that it misappropriated trade secrets.
The South Korean Ministry of Commerce welcomed the decision on Sunday.
Senior officials in Seoul, including Chung Sye-kyun, the country’s prime minister, have been pushing companies to reach an agreement for months. In March, however, the two sides seemed far apart on a possible settlement figure, with LG executives saying the gap was close to $ 1 billion.
Katherine Tai, the US Trade Representative, said, “I congratulate both companies for working through their significant disagreements to resolve this dispute, which builds confidence in their reliability and responsibility as suppliers to the US auto industry.”
Raphael Warnock, the Democratic senator for Georgia who had lobbied the Biden government and businesses over the dispute, said the resolution “would help advance the local economy.”
“It has always been clear what is the best way to protect [SK] workers in the trade – and the jobs that Georgians were promised – is for the affected companies to negotiate a settlement in good faith, ”he said.
Additional reporting by Song Jung-a and Peggy Hollinger