US Panel Launches Trade Secret Theft Probe Into China Steel

The U.S. International Trade Commission said on Thursday it launched an investigation into complaints by United States Steel Corp. that Chinese competitors stole its secrets and fixed prices, in the latest trade spat between the two countries.

The 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 steelmakers and distribution subsidiaries as respondents, including Baosteel, Hebei Iron and Steel Group, Wuhan Iron and Steel Co. Ltd., 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.

Baosteel, the second-largest steelmaker in China and fourth-largest in the world, responded by saying the charges were "rootless speculation and subjective assumption and could even be described as an absurd statement."

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.