Korean Chip Maker To Challenge Japanese Tariffs

by Mary Swire, Tax-News.com, Hong Kong

16 October 2008

Japan said this week that it would review a 9.1% tariff it levies against Hynix chips imported from South Korea.

Hynix, the world’s second largest producer of semiconductors, believes the tax leaves it at a disadvantage against Japanese rival Elpida.

The World Trade Organisation (WTO) had ruled for Japan’s tariff to be brought in line with international trade rules by September 1. When that didn't happen, South Korea asked the WTO to set up a panel to discuss the matter.

South Korea told the WTO’s dispute settlement body that Japan has engaged in “delaying tactics” in an attempt to retain the duty on imports from Korea for as long as possible. If the dispute continues South Korea says it will be forced to retaliate, possibly with trade sanctions against Japanese goods.

The EU, US and Japan have all levied punitive tariffs on Hynix components due to a 2002 bailout by the South Korean government which was adjudged to be unfair state aid. Now that the government-led bail out has been repaid Hynix believes the tariffs should be reviewed.

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