Out-Law News 1 min. read

South Korea complains to WTO over EU chip tariff


The South Korean government filed a complaint with the World Trade Organisation (WTO) on Monday over the European Union's recent imposition of a 34.8% tariff on imports of computer memory chips made by the country's Hynix Semiconductors Inc.

The tariff was imposed by the EU as a balancing measure, because of subsidies allegedly made to Hynix by state-owned or controlled banks.

The chips affected are Dynamic Random Access Memory, or DRAM, chips, the most common type of RAM for personal computers. Germany's Infineon Technologies AG, a rival manufacturer of DRAM chips, complained to the EU about Korean subsidies last year. The ensuing investigation lasted over a year and focused on two companies.

The first, Samsung Electronics, was found to have received subsidies to a value marginally beneath the level at which duties can be imposed, and no action was taken against it.

But the second company, Hynix, was found to have benefited from two types of subsidy, in the form of a refinancing programme with the Korean Development Bank and further financing from a group of different banks. Both measures were apparently carried out under the influence of the Korean government.

In April this year the Commission imposed a provisional tariff of 33% on Hynix, to last for four months. Earlier this month the Commission decided that the tariff should be increased to 34.8%, and should last for five years.

According to Associated Press, the South Korean government has now filed a complaint with the WTO over the tariff. The government argues that the funds given to Hynix were not state sponsored, and that some of the creditors involved are not even South Korean.

The EU tariff followed a similar move by the US Commerce Department, which imposed a tariff of 44.71% on the import of Hynix goods. According to Associated Press, South Korea is also intending to file a complaint with the WTO over this US tariff.

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