Trade Cases
USS Complaint Says Chinese Stole Secrets and Should be Banned from U.S. Market
Written by Sandy Williams
April 28, 2016
US Steel claims trade secrets involved in creating Advanced High Strength Steel (AHSS) were stolen in a Chinese cyber-attack in January 2011. Information acquired included the particular chemistry for Dual Phase steel (grades 590, 780 and 980) and its coating; critical temperatures and holding times for heating, cooling, and coating the steel; and the capabilities and layout of the intended production line.
US Steel maintains the attack was similar to one made to their network in 2010 in which a grand jury concluded it was perpetrated by Chinese military personnel. The FBI determined in that attack the Chinese government “blatantly sought to use cyber espionage to obtain economic advantage for its state-owned industries.”
Chinese steelmakers were having difficulty manufacturing the AHSS grades demanded by automakers to reduce weight of vehicles while maintaining the strength necessary for safety. The companies named in the US steel trade action were working on developing the required capabilities in 2010 and by January 2011 still had not been able to commercially produce the Dual-Phase steels that US Steel was producing.
According to the USS Section 337 Complaint documents, In January 2011 there was a cyber-attack against Eduardo Silva who was a “well-known senior researcher in AHSS at US Steel.” The attack was similar to previous Chinese government led attacks and was able to circumvent the technological safeguards used by US Steel. The attack managed to steal “…several gigabytes of valuable research data on advanced steels, including Dual-Phase 590, 780, and 980. Forensic analysis of the malware identified the Internet addresses it contacted to exfiltrate U.S. Steel’s trade secrets, and those Internet addresses have been linked to Chinese hackers.”
The USS complaint goes on to state that once the Chinese had control of Ed Silva’s company computer they used it to infiltrate the US Steel network specifically targeting files for the hot-dipped simulator developed by US Steel and used to improve production techniques for its Dual-Phase 590, 780 and 980 product lines.
Following the cyber-attack, which US Steel blames on the Chinese government, steel producers in China were finally able to commercialize the highest strength 980 Dual-Phase steel. US Steel maintains that the China Iron and Steel Association (CISA) distributed the trade secrets to the state-owned mills enabling them to manufacture AHSS that could compete with US Steel’s product.
Baosteel, in particular, was singled out and documentary evidence shows that the company’s current product catalog lists Dual Phase steels ranging from 450-1180.
US Steel maintains that it took more than ten years to develop the Dual-Phase products. Baosteel introduced their own Dual-Phase by 2013, developing them in the short period following the cyber-attack.
All of the Proposed Manufacturer Respondents in the Section 337 complaint are state-owned industries which share confidential information through an agreement with CISA said US Steel.
In the Section 337 Complaint, US Steel is asking for the ITC, through the U.S. court system, to block any and all carbon and alloy steels from China from entering the United States.
Sandy Williams
Read more from Sandy WilliamsLatest in Trade Cases
Price on Trade: IEEPA tariffs head to the Supreme Court, DOJ ramps up trade enforcement
International trade law and policy remain a hot topic in Washington and beyond this week. We are paying special attention to the ongoing litigation of the president’s tariff policies and the administration’s efforts to heighten trade enforcement.
Mexico considers stiff tariffs for steel, autos, and other imports
Mexico is considering imposing steep tariffs on imports of steel, automobiles, and over 1,400 other products. Its target? Countries with which it does not have free trade agreements, mainly China, India, Thailand, and other South Asian nations.
Leibowitz: With ‘reciprocal’ tariffs struck down again in court, what happens next?
President Trump’s “reciprocal” tariffs under the International Emergency Economic Policy Act (IEEPA) were struck down again, this time on Aug. 29 by the Court of Appeals for the Federal Circuit (CAFC). The legal and policy mess continues, with the next stop being the US Supreme Court.
Market unfazed by US circuit court’s IEEPA decision
Repealing any reciprocal tariffs placed by President Donald Trump on US imports of direct reduced iron (DRI), iron ore, hot-briquetted iron (HBI), and pig iron would have only a nominal impact on the US steel market, market participants said.
ITC votes to keep HR duties after sunset review
The US government determined this week that hot-rolled steel imports from a handful of countries continue to threaten the domestic steel industry.