Greatness Agenda

An American Company Under Siege in South Korea

China simply orders companies to hand over their intellectual property. A South Korean conglomerate is abusing the Korean court system to achieve the same end. Why hasn’t the U.S. government intervened?

We are all familiar with China’s predatory trade practices: intellectual property theft, subsidized exports, state-owned businesses masquerading as private enterprise, and counterfeit products just to name a few.

Beijing’s abuses are so numerous and so long-standing we pretty much expect them to cheat. If you’re China, “It’s what you do,” as the ad says.

But it’s worse when our allies use the same playbook to steal American technology and drive American companies into bankruptcy.

And that’s exactly what’s happening in South Korea right now.

In the 1960s, the South Korean government created POSCO (formerly known as Pohang Iron and Steel Company) and lavished it with grants, loans, and other subsidies.

These special favors, not available in a free-market system, helped POSCO grow into a sprawling conglomerate and the world’s largest steel manufacturer.

But the company doesn’t play by the same rules as American companies.

The Commerce Department found POSCO guilty of dumping steel into the United States at prices far below the cost of production—a tactic China uses regularly.

And dumping is not the only underhanded tactic POSCO has borrowed from China.

The South Korean conglomerate is abusing joint venture partnerships to steal intellectual property from an innovative American company, FuelCell Energy, a U.S. manufacturer based in Connecticut.

FuelCell is the first and only American company to produce industrial-scale fuel cell electric platforms—low-emission power generators. It developed its technology in conjunction with the U.S. Department of Energy, benefiting from hundreds of millions of taxpayer dollars and 50 years of American engineering.

FuelCell entered into a licensing agreement with POSCO in 2007 to expand its reach in Asian markets. South Korea is the biggest market for fuel cell technology.

But in 2016, POSCO suddenly began a series of legal actions in South Korean courts designed to force FuelCell to hand over its intellectual property or go bankrupt.

First, POSCO stopped selling FuelCell’s products, and then sued to freeze all of its American partner’s assets in Korea. That made it impossible for FuelCell to service its generators in South Korea. FuelCell still runs a 20-megawatt, $250 million plant in South Korea, but its assets are frozen.

POSCO then moved to block FuelCell from future business opportunities. In an attempt to keep FuelCell out, POSCO asked the South Korean government to bar foreign manufacturers from participating in clean energy programs.

POSCO is doing all this in an effort to grab the rights to FuelCell Energy’s pioneering clean-power technology, its intellectual property. At a meeting with the South Korean government’s Ministry of Trade, Industry and Energy, FuelCell was told it should just give POSCO what it wants.

China simply orders companies to hand over their IP; POSCO is abusing the Korean court system to achieve the same end. The South Korean conglomerate that benefits from Korean government protections is employing the same tactics we condemn China for using.

The U.S. government needs to intervene in this ongoing dispute. We’ve already hit POSCO with penalties for dumping steel. President Trump and his top trade officials should consider further penalties to force POSCO to negotiate an agreement with FuelCell Energy.