International Trade Daily™ provides rapid, reliable notification of the most significant developments affecting U.S. trade and international business policy, as well as the policies of major U.S....
By Brian Flood
May 26 — Chinese manufacturers of carbon and alloy steel products will be investigated for allegedly misappropriating U.S. Steel's trade secrets with the Chinese government's backing, the International Trade Commission announced May 26.
The commission also will investigate U.S. Steel's claim that Chinese producers and exporters engaged in a conspiracy to fix prices and control output and export volumes, and unlawfully concealed the origins of their products by sending them through Thailand, Malaysia and other countries (81 ITD, 4/27/16).
U.S. Steel, of Pittsburgh, is asking the ITC to bar the products at issue from being imported, marketed or sold in the U.S.
In 2014, the Justice Department indicted five Chinese military officials for allegedly swiping technology through cyber-espionage against U.S. Steel and other U.S. companies.
“We strongly believe that Chinese steel producers have engaged in illegal unfair methods of competition, which have created a force with which no market economy can compete,” said U.S. Steel President and Chief Executive Officer Mario Longhi in a May 26 statement. “We eagerly look forward to commencing discovery and confronting those who have engaged in these illegal acts that have negatively impacted our company. We remain confident that the evidence will prove the Chinese steel producers engaged in collusion, theft and fraud and we will aggressively seek to stop those responsible for these illegal trade actions.”
In a filing with the ITC, Baoshan Iron & Steel Co., China's second-largest steelmaker, accused U.S. Steel of trying to erect “a total blockade of steel trade” from China. Baosteel said that these types of allegations should be addressed through trade officials, rather than through the ITC's “Section 337” proceedings, which are usually used for patent-infringement cases.
Steel has become an increasingly contentious trade issue, with U.S. and EU producers placing the blame for a global steel glut primarily on Chinese overproduction (101 ITD, 5/25/16).
The ITC indicated that dozens of Chinese companies are under investigation in this case. They include Baoshan, Hebei Iron and Steel Group, Wuhan Iron and Steel Group Corp. and Shougang Group, all listed by the World Steel Association as among the top 10 steel-producing companies in the world in 2014 based on tonnage.
The case will be assigned to an administrative law judge, who will schedule and hold an evidentiary hearing. The judge's initial determination as to whether there has been any trade law violation will be subject to review by the commission.
With assistance from Susan Decker in Washington.
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