Georgia's SK Innovation -- Biden Urged to Overturn Agency's Ruling that Crippled Georgia Factory

President Joe Biden speaks from the State Dining Room at the White House, March 23, 2021. (Jonathan Ernst/Reuters)

President Joe Biden has just four days left to save SK Innovation‘s electric vehicle battery plant in Georgia, which is set to create more than 2,600 local jobs if it is not shut down by a U.S. International Trade Commission (ITC) ruling first.

In February, the ITC upheld a judge’s earlier ruling in favor of LG Chem, which has accused fellow South Korean company, SK Innovation (SKI) of stealing trade secrets related to lithium-ion battery production. 

The ITC has just one tool to impose any kind of remedy on a company for perceived wrongdoing: it can block imports via an exclusion order.

If the ruling stands it would essentially shut down the 2.4 million square foot plant in Commerce, Ga. “before it even gets started,” an adviser to SKI told National Review.

“We’re almost at the finish line and then the ITC says, ‘Nope, you’re not going to be able to import any of those rare [Earth] materials and other materials that they need to produce these batteries,’” the adviser said. “They’re stuck and there’s nowhere else they can get these things — they have to import those components. So if the ITC says you can’t import, that means there’s no business.” 

The plant’s first phase is set to employ 2,600 Georgians as it manufactures specially designed electric batteries for the new Ford EV F-150 truck and the Volkswagen’s Chattanooga, Tennessee electric vehicle manufacturing plant.

The decision allows for a limited transition period for SKI to meet the needs of its clients but has banned the company from importing critical components for its batteries for ten years.

As the ruling threatens to destroy one of the largest single investments in a job-creating initiative in Georgia’s history, lawmakers on both sides of the aisle are looking to Biden to reject the panel’s decision.

The president can veto the decision for any reason within 60 days of the ruling, as former President Barack Obama did in 2013 when the commission moved to ban the import of some older models of the iPhone and iPad in a dispute between Apple and Samsung.

As the ITC released its decision in February, Biden has until April 11 to intervene.

Those urging Biden to step in and reject the ruling argue there is a better place to resolve this issue between two South Korean companies: the U.S. District Court in Delaware, where a parallel suit has been filed with the same allegations.

“If the president disapproves of this decision, it’s not as though LG loses and doesn’t have an ability to continue to seek its claims in court,” she said. “Everybody else still gets their day in court.”

However, the district court can impose “more appropriate remedies” so the factory can remain open, saving American jobs and strengthening the supply chain.

Rick Manning, the president of Americans for Limited Government, echoed this sentiment, telling National Review that the White House can “have your cake and eat it here” by rejecting the decision and letting the dispute play out in district court.

“If Joe Biden wants to create green jobs and Joe Biden wants to have electric vehicles be prominent, if not predominant, then he has to reject this because his goals can’t be accomplished any other way,” he said.

With thousands of high-paying jobs on the line in a state with two Democratic senators, there are numerous reasons rejecting the decision is in Biden’s favor, proponents argue.

“You’d be very hard-pressed to find anybody who doesn’t want this massive, massive facility to open,” the SKI adviser said.

U.S. Senator Raphael Warnock (D., Ga.) said at a recent hearing that the ITC ruling was a “punch in the gut” to the state.

Georgia Governor Brian Kemp, a Republican, wrote to Biden last month calling on him to intervene, noting that “the livelihoods of thousands of Georgians are now in your hands.”

“The Commerce plant fits squarely into your publicly announced goal of electrification of the U.S. auto fleet with good, high paying jobs for local workers,” Kemp writes. “Furthermore, your recently announced Executive Order on supply chains recognized the critical role of EV batteries to our economy and national security. Given that China is currently the leading producer of EV batteries, closing the Commerce, Georgia plant will result in the United States falling further behind China in the global EV battery race.”

He noted that the factory, upon completion, will account for “nearly half of our nation’s vitally needed non-captive EV batteries, which will be available for purchase by EV manufacturers on the free market.”

The plant, which will be the only major EV battery plant in the nation to have been built without federal subsidies, will have an initial yearly output that will supply enough battery capacity for 330,000 electric cars, he adds.

Currently, if an automaker wants to purchase batteries they either have to import them or seek out a joint venture with a big battery company. Most imports currently come from China, which houses roughly 75 percent of the battery production business.

“It’s hugely important to automakers in the United States that there are more batteries created here. It’s expensive to import them,” the SKI adviser said, noting that the imports also affect foreign-based manufacturers under the U.S.-Mexico-Canada trade agreement, which requires a Regional Value Content of 75 percent. Meeting the requirement will be difficult, if not impossible, if the factory shuts down.

While some have questioned why LG Chem can’t just take over the factory, the SKI adviser notes that the company would “basically be buying a shell.”

“There’s not an ounce of equipment that would remain there. They would have to bring in every bit of their engineering and people and equipment and everything else, which is years and years and years of work.”

Even if LG wanted to take over the plant or open a new factory, “it would be years and years away, which would just massively disrupt the schedules of these automakers.”

It seems like a “heavy-handed decision to allow to stand when there’s just a really easy way of fixing it,” she added noting that the “whole purpose of .. the trade secrets section and the ITC is to protect American industry.”

“The only effect of this decision is to shut down a massive American factory, so it seems like it’s sort of turning that whole purpose of the ITC on its head,” she said.

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