U.S. panel launches trade secret theft probe into China steel

27 May 2016

U.S. regulators on Thursday launched an investigation into complaints by United States Steel Corp (X.N) that Chinese competitors stole its secrets and fixed prices, in the latest trade spat between the two countries.

The International Trade Commission (ITC) said in a statement that it has not made any decisions on the merits of the case.

U.S. Steel, in its complaint under section 337 of the main U.S. tariff law, is seeking to halt nearly all imports from China's largest steel producers and trading houses.

The commission identified 40 Chinese steel makers and distribution subsidiaries as respondents, including Baosteel Group, Hebei Iron and Steel Group, Wuhan Iron and Steel Co Ltd (600005.SS), Maanshan Iron and Steel Group (600808.SS), Anshan Iron and Steel Group and Jiangsu Shagang Group.

The probe comes amid a barrage of efforts by the U.S. Commerce Department to clamp down on a glut of Chinese steel imports, including steep anti-dumping duties on corrosion-resistant steel announced on Wednesday.

U.S. Steel filed its original complaint a month ago, alleging that it was a victim of a 2011 computer hacking incident that also prompted U.S. federal cyber-espionage indictments against five Chinese military officials in 2014.

The Pittsburgh-based steelmaker alleged the hackers stole research data on production techniques for a new generation of lightweight, high-strength steel now favored by automakers. It said this accelerated Chinese competitor Baosteel's ability to replicate the product, which took U.S. Steel a decade to develop.


Chinese steelmakers and officials rejected the need for the probe, and said steelmakers said they would contest any findings.

"The U.S. steel industry has already lost its leading position and there is nothing worth stealing," said an executive with Maanshan Steel told Reuters. "The United States is a market economy and we don't understand why they are taking these measures."

"The United States said we conspired," added the executive, who asked not to be named. "In fact, we wish the domestic steel sector was able to work together, but this is precisely what we are the worst at, and it is even less possible that we would distort the market through government action."

Baosteel, China's second-largest steelmaker and the world's fourth-largest, said in a statement the United States was acting in breach of World Trade Organization rules. It urged the Chinese government to take all necessary measures to ensure the sector receives fair treatment.

China's Commerce Ministry said it was resolutely opposed to the probe and would encourage its firms to legally defend themselves.

The ministry said trade remedy measures recently being taken by the United States were protectionist, and would artificially interfere with trade rather than solve the industry's current problems.

U.S. Steel Chairman Mario Longhi applauded the ITC's decision to investigate the company's claims, which also allege that Chinese producers falsely named other countries as the origin of their products and illegally transhipped them through third countries to avoid anti-dumping and anti-subsidy duties.

"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," Longhi said in a statement.

Such intellectual property-based claims have only been made once before by U.S. steel producers, in 1978 against 35 Japanese makers and importers of welded stainless steel pipe. But the ITC, rather than barring imports of the products from Japan, instead ordered 11 firms to stop unfair pricing practices.


Source : reuters.com