Japan to Issue Tariffs Against Hynix

Online Staff -- 1/23/2006

The South Korean Ministry of Commerce, Industry and Energy confirmed on its Web site today that Japan is deciding to levy tariffs against Korean DRAM maker Hynix Semiconductor.

The move would make Japan the third foreign government to level tariffs against Hynix, following the United States and the European Union. Reports began surfacing out of Japan on Friday that Japan's finance ministry would begin leveling a tariff of 27.2 percent beginning Jan. 27th against Hynix, the world's second largest DRAM supplier behind fellow Korean supplier Samsung.

The United States and the EU leveled tariffs of 44 percent and 34.8 percent respectively in 2003, which subsequently led to World Trade Organization (WTO) arbitration efforts and court actions in both Europe and the United States that are still pending. These actions stemmed from U.S. and European claims that the South Korean government efforts to bailout Hynix, which nearly went bankrupt early in 2003, essentially amounted to government subsidies, illegal under WTO rules.

The WTO partially rejected the EU's contention that the Korean government illegally subsidized Hynix. The WTO ruled that the bailout did not constitute illegal subsidies, however it agreed that backing by a Korean state insurance company for Hynix exports and the purchase of Hynix bonds by the government-controlled Korea Development Bank in 2001 were commercially unjustifiable.

Hynix' creditors' bailout plan immediately drew the ire of its international rivals in the U.S. and Europe; Japan's government began investigating the issue in 2004 following the decisions abroad against Hynix, and complaints by Japan DRAM maker Toshiba, among others.

© 2009, Reed Business Information, a division of Reed Elsevier Inc. All Rights Reserved.