WTO investigates South Korean claims on chip tariffs

South Korea’s claims that the U.S. and the European Union (E.U.) imposed unfair trade barriers to sales of Korean memory chips are to be examined by the World Trade Organization (WTO).

The WTO’s Dispute Settlement Body (DSB) set up two panels Friday to investigate separate claims made by South Korea against the U.S and against the E.U.

The dispute with the U.S. concerns a countervailing (or compensatory) duty that the U.S. International Trade Commission (ITC) imposed on imports of South Korean dynamic RAM (DRAM ) chips on Aug. 11, 2003. The ITC was responding to a November 2002 complaint from Micron Technology Inc. of Boise, Idaho, about the pricing practices of Hynix Semiconductor Inc. of Seoul.

This is the second time South Korea has asked the WTO to investigate its concerns about the DRAM duty. The DSB’s Panel DS296, established Friday, will examine the matter; China, the E.U., Japan and Taiwan have asked to sit in on the panel. The U.S. maintained that the duty was consistent with its obligations to the WTO, according to a WTO account of Friday’s meeting.

The DSB set up another panel, DS299, to examine complaints about retaliatory measures taken by the E.U. against South Korean DRAM imports. Last April, the E.U. imposed a 33 per cent duty on imports of DRAM chips manufactured by Hynix, claiming they were subsidized by the Korean government. An E.U. representative at Friday’s meeting said the U.S. had come to the same conclusion, and the E.U. action was also compatible with WTO rules, according to a WTO account of the meeting. Panel DS299 will also be observed by China, Japan, Taiwan and the U.S.

The WTO is a discussion forum within which nations agree to rules and resolve disputes about international trade. The DSB, made up of all WTO members, has the power to force governments to comply with its dispute settlements. The DSB met again Monday to discuss other matters; its next scheduled meeting is set for Feb. 17.

Micron, the company that kicked off the sequence of events leading up to the U.S. imposition of countervailing duty, is feeling the pinch less now.

In December, it reported net income of US$1 million on sales of US$1.1 billion for the first quarter of its fiscal year 2004, the 14-week period ending on Dec. 4, 2003. In contrast, it made a US$316 million net loss on sales of US$685 million in the 13 weeks ending Nov. 28, 2002, around the time it complained to the U.S. Commerce Department about Korean DRAM prices.

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