U.S. Steel's Trade Secret Theft Complaint to Continue

The International Trade Practice Center on Bloomberg Law® provides in one comprehensive, time-saving resource.

By Rossella Brevetti

Aug. 17 — U.S. Steel Corp.'s charges that Chinese makers of carbon and alloy steel products stole trade secrets will continue being investigated as the International Trade Commission said that suspension of the case was inappropriate.

The ITC could ban or restrict the import of these products from China if the agency finds a violation of Section 337—a provision of the 1930 Tariff Act.

The Aug. 16 formal opinion follows the agency's Aug. 5 announcement that the closely watched case can move forward after it was suspended (152 ITD, 8/8/16).

U.S. Steel Corp. is alleging that Chinese manufacturers of carbon and alloy steel misappropriated the company's trade secrets. Allegedly, 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. U.S. Steel wants the allegedly infringing steel blocked from entry into the U.S.

Steel giants Baoshan Iron & Steel Co., Hebei Iron and Steel Group, Wuhan Iron and Steel Group Corp. and Shougang Group are among the firms under investigation. Hunan Valin Steel Co., another Chinese manufacturer named in the case, has said U.S. Steel's actions are “not a campaign against individual private entities but a campaign against the Chinese government itself.”

Baoshan Iron & Steel Co., China's second-largest steelmaker, in a May 11 filing urged the ITC to reject the complaint. “Never before has a single company sought to use this agency to erect what would be a total blockade of steel trade from an entire country,” the firm's American unit said in the filing(94 ITD, 5/16/16).

July Suspension

In July, an ITC administrative law judge suspended the investigation over concerns that parts of the investigation could fall under the Commerce Department's purview relating to antidumping and countervailing duty laws. The judge suspended the case to allow the Commission to provide notice to the Commerce secretary and due to the pendency of proceedings before Commerce.

A letter to the ITC from Commerce Secretary Penny Pritzker said that Commerce is engaged in two investigations of steel products that “potentially” could come within the scope of the ITC's investigation. These two probes are stainless steel and strip from China and carbon and alloy cut-to-length plate from China.

The ITC agreed with U.S. Steel that there is no statutory basis on which to suspend a case based on absence of notification to the commerce secretary. As for U.S. Steel's argument that the unfair acts in this case do not fall within the purview of the dumping or countervailing duty statutes, the agency said it need not decide this issue because there are no overlapping Commerce antidumping or countervailing duty investigations that would affect the alleged unfair acts in this investigation. Nor is there any indication that any such cases will be commenced, the ITC said.

The respondents said that U.S. Steel's claims should be dismissed because they fail to state a claim for anything beyond antidumping and countervailing duty claims. If dismissal is appropriate on the merits, that argument should be presented to the administrative law judge for determination, the ITC said. “An opposition to a petition for review of the suspension [initial determination] does not provide an opportunity for the respondents to offer arguments to dismiss claims on the merits,” the agency said.

U.S. Steel's case focuses on advanced high- strength material used in the automotive industry, which requires light, flexible steel that's corrosion resistant.

To contact the reporter on this story: Rossella Brevetti in Washington at rbrevetti@bna.com

To contact the editor responsible for this story: Jerome Ashton at jashton@bna.com

Copyright © 2016 The Bureau of National Affairs, Inc. All Rights Reserved.

Request International Trade Practice Center on Bloomberg Law