South Korea Seeks Redress At WTO Over Tariffs On Hynix Chips

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

27 January 2004

Following a request by the South Korean government, the World Trade Organisation revealed last Friday that it is to establish a panel to decide whether tariffs placed on the import of computer chips by the EU and the US are legal.

The two trading blocs imposed the countervailing measures on chips manufactured by Hynix, the world’s third largest chip maker, on the grounds that the restructuring of some of the firm’s loans and a debt-for-equity swap by a partially state-owned bank effectively amounted to a government subsidy for the firm.

After Germany’s Infineon Technolgies, and American chipmaker Micron Technology filed complaints with the trading authorities in the US and the EU in 2002, the European Union placed a provisional 33% tariff on Hynix imports last year (later hiked to 34.8%). This action was closely followed by the US government, which imposed a 44.71% levy on the Korean chips.

The South Korean government is arguing that imports of Hynix chips have not been detrimental to its international competitors, and that the tariffs therefore amount to a breach of international trade laws.

Recommended