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(EDITORIAL from Korea Times on Feb. 16)

Editorials from Korean dailies 07:13 February 16, 2021

Find compromise

The U.S. International Trade Commission (ITC) ruled in favor of LG Energy Solution in a trade secret case against SK Innovation last Wednesday. The ITC banned SK Innovation from importation, domestic production and sales of its electric vehicle batteries in the United States for 10 years.

The ruling is expected to deal a blow to SK Innovation as the trade panel acknowledged LG's accusation that SK infringed on its trade secrets. SK seems to be expecting U.S. President Joe Biden to exercise his veto power against the ruling within the 60-day review period. Yet, such a possibility appears remote given that Biden has underlined the importance of protecting intellectual property rights and there has been no precedent of a president vetoing in intellectual property cases.

Furthermore, the ITC permitted SK to import components to produce battery packs for Volkswagen for two years and for Ford for four years. This will likely reduce the possibility of Biden exercising his veto right to protect U.S. client companies and jobs.

Now all eyes are fixed on whether the two Korean companies will sit together to find a way out of this mess in the wake of the ITC ruling. For SK, which is building two EV battery plants in the U.S. state of Georgia, it needs to reach a compromise with LG to avoid the import ban and complete the construction of its U.S. production facilities. Ford and Volkswagen have also been calling for immediate settlement of the dispute between LG and SK.

Prime Minister Chung Se-kyun also urged the two rivals to reach an agreement at an early date, indicating a prolonged dispute will only benefit their foreign competitors. Georgia Governor Brian Kemp has been calling on Biden to wield his veto power as SK has promised to create 2,600 local jobs with the two battery plants.

Lithium-ion batteries, which are called the "second semiconductor," have emerged as a key component of electric vehicles. Battery-making is seen as a lucrative future business following memory chips. Currently, three Korean makers along with Samsung SDI are accounting for 34 percent of the global market.

Yet the global competition has become intensified with major companies rushing to develop state-of-the-art batteries and making huge investments. For instance, U.S. electric carmaker Tesla recently announced its ambitious plan to develop its own EV batteries while the European Union is aiming to achieve 100 percent domestic battery supply for its companies by 2025.

Chinese and Japanese firms are also desperate to nibble at the Korean companies' global market share. In this situation, LG and SK should waste no time or efforts by continuing to haggle over the trade secret issue. Expectation has been growing over a "K-battery alliance" comprising the three battery makers and two domestic carmakers ― Hyundai Motor and Kia. All told, the companies should find a negotiated solution. Most of all, SK needs to offer sufficient compensation to LG for misappropriating its intellectual property.

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