WTO Orders EU to Reconsider Punitive Tariffs for Hynix

WTO Rules Against EU in Hynix Case

by Anton Shilov
06/19/2005 | 11:26 PM

The World Trade Organization late last week ruled that European Union should reconsider punitive duties it imposes on memory chips sold by Hynix Semiconductor. While the decision supports the memory manufacturer, it does not order the EU to stop the duties fully, something which Hynix demands.

 

The panel concluded that besides failing to prove the illegality of the restructuring support for Hynix, the European Union incorrectly calculated the material injury caused to its own producers by the subsidies, EETimes reports. The EU now reportedly has about a month time to prepare its plan to bring its countervailing duties into “conformity”. It is unclear whether the EU will have to return Hynix already paid tariffs.

While the WTO found that in general 2001 rescue package that included loans and debt-for-equity swaps arranged by the South Korea-based memory maker’s creditors were not illegal subsidies, WTO said the help organized by government-controlled Korea Development Bank was “commercially unjustifiable”.

In March, 2005, WTO already said that neither EU, nor U.S., could proof that Hynix had received illegal subsidies.

The EU Commission and the US Department of Commerce found Hynix Semiconductor guilty in getting illegitimate financial support from its creditors that were said to be controlled by the Korean government as well as numerous other kinds of financial assist.

In the first half of 2003 the USA and the European Union imposed definitive anti-dumping duties on shipments of Hynix DRAM products in the EU and the USA. The US Department of Commerce slapped 44.71% on imported DRAMs from Hynix Semiconductor, the EU Commission taxes the memory maker with 34.8% tariff. Both duties became effective in Summer 2003.

The World Trade Organization initiated the investigation of the legality of countervailing duties imposed by the USA and the EU in 2003 on production of Hynix Semiconductor in early 2004. The probe was requested by the Korean government, who opposes punitive tariffs and rulings against Hynix.