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WTO investigates South Korean claims on chip tariffs

WTO investigates South Korean claims on chip tariffs

South Korea's claims that the US and the European Union (EU) imposed unfair trade barriers to sales of Korean memory chips are to be examined by the World Trade Organisation (WTO).

The WTO's Dispute Settlement Body (DSB) has set up two panels to investigate separate claims made by South Korea against the US and against the EU.

The dispute with the US concerns a countervailing (or compensatory) duty that the US International Trade Commission (ITC) imposed on imports of South Korean dynamic RAM (DRAM) chips on August 11, 2003. The ITC was responding to a November 2002 complaint from Micron Technology of Boise, Idaho, about the pricing practices of Hynix Semiconductor 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 - set up last Friday - will examine the matter; China, the EU, Japan and Taiwan have asked to sit in on the panel.

The US 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 EU against South Korean DRAM imports. Last April, the EU imposed a 33 per cent duty on imports of DRAM chips manufactured by Hynix, claiming they were subsidised by the Korean government.

An EU representative at the meeting said the U.S. had come to the same conclusion, and the EU action was also compatible with WTO rules, according to the WTO account of the meeting.

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 on Monday to discuss other matters; its next scheduled meeting is on February 17.

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

In December, it reported net income of $US1 million on sales of $US1.1 billion for the first quarter of its fiscal year 2004, the 14-week period ending on December 4, 2003. In contrast, it made a $US316 million net loss on sales of $US685 million in the 13 weeks ending November 28, 2002, around the time it complained to the US Commerce Department about Korean DRAM prices.

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