Original URL: http://www.theregister.co.uk/2005/10/24/hynix_slams_japan_import_levy/

Hynix slams Japan's 27.2% DRAM tax plan

Inappropriate and unfair, apparently

By Tony Smith

Posted in Financial News, 24th October 2005 10:53 GMT

Hynix has criticised plans announced by Japanese regulators to slap a 27.2 per cent punitive import duty on its DRAM products as "unfair" and "inappropriate".

The intention to impose the levy emerged last week, and follows complaints made in June 2004 by Japanese memory makers. They alleged Hynix had received unlawful financial aid from the South Korean government which provided the memory maker with an unfair competitive advantage that was hurting the Japanese memory industry. The Japanese government announced an investigation into the claims the following August.

More than a year later, its verdict is that Hynix did receive unwarranted state funding, and unless Hynix can show otherwise, the 27.2 per cent duty will be duly levied. The provisional ruling is likely to be made formally before February 2006.

The levy and the reasons behind it mirror similar events in Europe and the US, where regulators imposed import duties of 34.8 per cent and 44.3 per cent, respectively. Hynix subsequently complained to the World Trade Organisation (WTO), which has since told European and US authorities to rethink the levies. That said, the WTO in June reversed an earlier ruling against the US levy on appeal, and it's possible the EU verdict may go the same way.

For its part, Hynix said it would "actively counter" the Japanese tariff, suggesting it will similarly ask the South Korean government to raise the matter on its behalf with the WTO. In the mean time, it has until 21 November to lodge a formal complaint against the provisional ruling.

Hynix said the ruling was unfair because "current market conditions" make it difficult to conclude that anything Hynix did damaged Japanese firms. What's more, it said, "the claims Hynix received [illegal] state subsidies are not backed by clear legal evidence", the Financial Times noted today. ®