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U.S. Imposes Big Tariffs On Korean Chipmakers
dipfan writes "This is serious - the U.S. government has decided to levy steep import tariffs on South Korean computer chips (and Vietnamese catfish). The result is a 44 percent tariff on DRAM semiconductors made by Hynix. The case was brought by Micron Technology on the grounds that the South Koreans were receiving unfair subsidies. Hynix says the tariff is 'outrageous', and the South Koreans plan to appeal to the World Trade Organisation."
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ZDNET
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This tariff has been in the air for Hynix for a few months now. They're getting it easier than originally proposed: the tariff was originally 57%. Also, the US is not the only one sticking it to the Koreans: the European Commission smacked them with a 37% duty too.
In Soviet Russia, Jesus asks: "What Would You Do?"
Although this will result in somewhat higher prices in the short term it should result in the long term viability of the market. Hynix has been illegally propped up by their government many times and their ability to sell products below cost just weakens the entire sector. Add to that the fact that the union blackmailed the company into not accepting a takeover bid from a company that might have actually turned em around and I doubt that the WTO will do much to the Americans.
There are 4 boxes to use in the defense of liberty: soap, ballot, jury, ammo. Use in that order. Starting now.
Since the state-controlled banks in South Korea seem to be willing to perpetually forgive, extend, or renegotiate Hynix's tremendously large debt burden, the USA (and EU) are only protecting their companies from unfair competition. The South Korean government is basically subsidizing Hynix through their banks. The headline is somewhat misleading because this tariff (if I understand it correctly) only effects Hynix's products, not all South Korean memory manufacturers (if there are any others) and certainly this doesn't effect Taiwanese manufacturers.
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Here's a couple links to Hynix's most recent multi-billion dollar bailout.
http://www.news.com.au/common/story_page/0,4057,5
http://www.geek.com/news/geeknews/2002Dec/wbc2002
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Where are the slash-groupies? I distinctly remember being promised slash-groupies!
Actually it is an example of pig headedness. If the US market breeds unfair competition, then it should rethink its business model instead of imposing large and/or illegal tarrifs.
Did you know that the US thinks the Canadian Wheat Board subsidized farmers off the books, to sink American farmers, and so Canadian farmers are being unfairly abused by the American market.
Or how about the illegal [as the WTO ruled] tarrif on Softwood lumber?
Or how about the Mad Cow related Canadian beef ban, when the cow has ties to Montana, USA?
Double standard? You bet.
Why slashdot? Why not?
Which begs the question, if I go to Canada and buy said electronics, what do I have to do to bring them back to the US (legally)?
- "In 2000, Korea was the United Statesâ(TM) sixth largest export market. In 2000, two-way merchandise trade between the United States and Korea reached record levels, totaling $68.2 billion, compared with $54.3 billion for 1999."
- 8% tariff on US automobile imports into Korea
- 317% import tariff on US potato products
From the ZDNet article, "Semiconductors are South Korea's biggest export and generated $16.6 bn in overseas sales in 2002. DRAM exports represent 35 percent of total semiconductor exports."
From a CIA report, South Korea's total exports for 2002 was $159.2 billion.
This implies that ~10% of the Korean economy is in semiconductor sales alone. Recall that recently South Korea is warming up to North Korea, and if we add that Pres. Bush has already put North Korea on notice regarding their weapon exports, we should not be surpised that the government would penalize the friend of your enemy.
My personal beliefs are that that tariffs are bad on both imports and exports, but after reading the report on how much Korea taxes US exports, I don't pity them.
Interestingly enough, "In spring 2000, Korea was elevated to the Special 301 "priority watch list" as a result of continuing concerns regarding inadequate IPR enforcement, lack of protection for clinical drug test data, lack of full retroactive protection for pre-existing copyrighted works and pharmaceutical patents, problematic amendments to Koreaâ(TM)s Copyright Act and Computer Program Protection Act, lack of coordination between Korean health and IPR authorities on drug product approvals for marketing, and continued counterfeiting of consumer products."
Not that I support the tariff, but it seems like slashdotters don't know the whole story, so let me explain.
Hynix, for the last few years, has been losing a LOT of money, mostly due to the commoditization of DRAM and general Asian economic malaise. A couple years ago, Micron offered to buy Hynix. Hynix refused and instead kept taking out loans and otherwise attempted to stay afloat. (Hynix was bailed out a couple times after the first proposal. Some of these loans were from government owned banks; also, apparently, Hynix received some direct subsidies from the Korean government.)
Last year, though, Hynix's bad fortune came to a head, and the company was on the verge of collapse. Micron again offered to buy Hynix, and after extensive negotiations, it seemed like the merger would go through. But for some inexplicable reason, at the last minute Hynix refused the offer, claiming it wasn't high enough. (I say inexplicable because there were no other buyers or potential buyers and Hynix was ridiculously deeply indebted -- in this situation (i.e., close to bankruptcy with a viable way out), refusing to merge was almost probably (at least in America) not in the best interests of its shareholders.) Some creditors tried to band together and force Hynix to sell itself (after the two bailouts, creditors were the biggest shareholders) but that didn't pan out.
As Hynix's debt grew and grew and its financial state deteriorated (even after two huge bailouts) everyone knew that Hynix needed to get acquired -- even the government encouraged it. However, Korean politicians, civic groups and industry leaders outwardly opposed Hynix's acquisition by a foreign company; they wanted to figure out a way to keep Hynix Korean. From what I remember, a few months ago Hynix went through a restructuring/recapitalization and got some debt relief, but its financial prospects haven't improved.
Hynix's survival is very, very strange given its circumstances, except when you realize that its survival is only due to tremendous political pressure to keep the company alive for a Korean acquirer. Otherwise, I think that financial analysts have uniformly agreed that Hynix needs to get acquired by somebody.
For better or for worse, Micron had a strong argument. Hynix should probably not be independent right now, and is only so because of the direct (and indirect) help of the Korean government. Also, the overall effect has been really bad: Hynix's non-creditor shareholders have been screwed repeatedly in the bailouts (convertible debt is great for creditors, horrible for current shareholders); Korean government-owned banks have arguably wasted insane amounts of money by riskily throwing it Hynix; and now, prices for DRAM will artificially go up because of the tariffs.
duffbeer703, please put your hands up in the air. You are being arrested for the murder of Jimmy Hoffa.
What's that? You didn't murder Jimmy Hoffa? Well, I don't need proof. I think you did. Tell you what, duffbeer703, I'm going to arrest you and execute you anyway. I know you did it, I just need a little more time to find the evidence. Would you prefer death by bunker buster, or M-16?
What's that? You'd rather I had proof before I convicted you?
That's just crazy talk.
p.s. The CIA helped the Iraqis gas the Kurds. Not to mention the U.S. sold them the helicopters. See this report by a professor at Cornell, if your memory of history is a bit foggy.
I moderate "-1, Fool"
If you google around a bit, you'll find that chemical weapons are pretty hard to destroy and require very large incinerators that would easily be spotted by satelliete.
This is totally and utterly wrong. Don't believe everything you read on the internet, son...
When I did my military service we were trained in destroying chemical weapons.
They are pretty reactive (otherwise they would be lousy weapons), and can easily be neutralized by ordinary household cleaning products, or gasoline (Iraq certainly had no shortage of that one...).
I have personally tried this with both sarin (a nerve-agent) and mustard-gas, and were told it would work on other substances, like Fosgen or VX too.
Most chemical weapons also decay with time (very reactive, remember) and thus proving that Iraq had working nerv-agents a decade ago doesn't prove they had it now since their proven 1993 weapons would be unsable by now.
Chemical weapons are horrible, but you don't have to believe all the FUD and propaganda surrounding them.
"First lesson," Jon said. "Stick them with the pointy end."
The problem with trade law is that your definition of dumping is slightly off. As applied, it's often defined as when an import is sold at a price below what the domestic producer's cost is. So the foreign manufacturer may well be making a profit due to currency conversion or greater efficiency, but the domestics run to the government with hat in hand claiming that they'll be out of business in no time without punitive tariffs in place.
There are very few examples of companies that lobby for a temporary import restriction, and actually use that timeframe to revamp their operations and compete successfully in the open market after the restrictions are lifted. The best example I can recall is Harley Davidson.
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