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Japan May Impose Duties on Hynix DRAM Chips
Feb 2, 2004
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The Japanese government is considering imposing additional duties on dynamic random access memory, or DRAM, chips produced by South Hynix Semiconductor Inc. after complaints that the company is using subsidies to sell its products at artificially low prices, the national, daily newspaper Yomiuri Shimbun reported, citing sources.

If the government goes ahead with the plan, it would be the first time it has imposed a so-called countervailing duty on imports.

According to the sources, domestic semiconductor makers plan to ask the government to impose the countervailing duty on Hynix products. The government intends to wait for the request and will then conduct research before implementing the duty as early as this summer, the newspaper said.

The duty is intended to prevent cheap imports from undercutting sales at domestic semiconductor makers. It comes after a surge in cheap imports from Asian countries.

The resulting price competition with South Korean makers has forced several domestic firms to shut down. An Economy, Trade and Industry official said the government was concerned that other firms could suffer. "Sales of digital household appliances have been increasing recently," he said. "We want to make sure consumer electronics firms don't suffer the way DRAM makers have."

The countervailing duty is intended to offset subsidies to foreign firms by their governments, and ministers hope it will forestall any damage to domestic firms from artificially cheap imports.

Such tariffs are allowed under World Trade Organization (WTO) rules, but it would be the first time Japan has exercised its right to impose them.

Domestic semiconductor makers, including Elpida Memory Inc., financed fifty- fifty by NEC Corp. and Hitachi Ltd., plan to apply to the government for a countervailing duty on Hynix products in January at the earliest, the Yomiuri said.

The firms consider a subsidy given to Hynix by a South Korean government- related financial institution as improper and say they have suffered from unfair price competition.

In response to the application, the government is expected to send a letter of inquiry to Hynix concerning its subsidies. The government is expected to decide on a course of action after inspecting Hynix's response to the letter.

The additional tariff rate to be levied on the products will likely be between 20 percent to 40 percent.

It will take about 1 year for the government to complete its research into Hynix subsidies. However, the government may implement the duty on a provisional basis ahead of any final decision. The government is expected to impose the duty on a temporary basis as early as this summer.

Hynix has about 13 percent of the world market for DRAMs.

The U.S. government and the European Union (EU) already have imposed countervailing duties of between 30 percent to 45 percent on Hynix DRAMs. The duties were imposed last summer after complaints from industry organizations in Europe and the United States.

From 1995 to June 2003, the United States has implemented the duty 41 times and the EU 19 times, while Japan has yet to impose such duties. (Dow Jones)

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