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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."
as per US tariff trade law. Just the same way that US steel and lumber tariffs to US steel companies and US lumber companies respectively. Basically this means that the comsumer pays for the inefficiency of these firms, and those same inefficient firms get rewarded for their lack of productivity. Wacky system. Let he with the most lobbying money win.
I see that the U.S. government is continuing it's slide into the corporate welfare government. Corporations don't need welfare and protection. If they can't compete, get the fuck out or find a new business plan.
Maybe that means that Micron needs put a plant in Korea or something. I don't know. But as a consumer I want the lower prices, it makes me want to go and buy more memory. I don't see my government acting in my favor here.
sri
Just like we tax polluting fuels to encourage alternatives, this would have a very positive effect on "alternative" operating systems.
Unless you intend travelling overseas in the near future (and that puts you in a minority of Americans) you should be putting your (American-made) party hats on and celebrating this end to an imbalanced economy.
Any sufficiently advanced technology is indistinguishable from a rigged demo
--Andy Finkel (J. Klass?)
Korea makes a huge amount of different kind of embedded electronics. For example, they export a huge number of the ATMs in use in the United States. If I remember correctly (and I may not) Chung Ho electronics makes a big perecentage of them. Glory brand ATMs are also manufactured in Korea, IIRC.
You *will* be screwed by this ruling, regardless of where you live. Prices for various electronics will be going up.
The next Slashdot story will be ready soon, but subscribers can beat the rush and slashdot the links early!
From Cringely's "Accidental Empires":
In 1975, Japan's Ministry for International Trade and Industry had organized JApan's leading chip makers into two groups-- NEC-Toshiba and Fujitsu-Hitachi-Mitsubishi-- to challenge the United States for the 64K DRAM business. They won. By 1985, these two groups has 90 percent of the U.S. market for DRAMs. American companies like Intel, which had started out in the DRAM business, quit making the chips because they weren't profitable, cutting world DRAM production capacity as they retired. To make matters worse, the United States Department of Commerce accused the Asian DRAM makers of dumping-- selling their memory chips in America at less than it cost to produce them. The Japanese companies cut a deal with the United States government that restricted their DRAM distribution in America-- at a time when we had no other reliable DRAM sources. Big mistake. Memory supplies dropped just as memory demand rose [OS/2 had created a need for RAM] , and the classic supply-demand effect was an increase in DRAM prices, which more than doubled in a few months. Toshiba, which was nearly the only company making 1 megabit DRAM chips for a while, earned more than $1 billion in profits on its DRAM business in 1989, in large part because of the United States government.
Let's see, thanks to Bush I've been able to witness a war over weapons of mass destruction (Iraq has WoMD you just can't see them fool), I've been given the honor to go through a POS economy (and don't give me this Clinton set it up crap, the GOP was in office for 6 years before Clinton, and for 6 years the economy crap), the Bush appointed Ashcroft cut the DOJ's budget for the Microsoft case & changed course from justice to slap on the wrist (if you can even call it that), the Bush appointed Ashcroft -- gaining control via the homeland security bill -- put an end to the inconvenient reports filed by the ATF each year that showed the stats of gun dealers in regards to them being caught selling illegally, my state -- along with the vast majority of the states -- are poor as hell now due to tax cuts that lead to a drastic cut in federal funding...
/invisable/ WoMD!).
Oh, but this president doesn't get laid, so I guess that should make me proud. Because getting laid is much more shameful than inciting a war that lead to the death of thousands of innocent people (Oh, I think I figured it out, Saddam is using ultra-high tech
http://www.archive.org/details/ThePowerOfNightmares
I'll bite.
Steel tarrifs are there for a reason. I don't know the current situation in detail, but when NAFTA hit Canada started sucking up the steel business. They were much cheaper than US counterparts. I know this because my own father (we're from Michigan) started buying Canadian steel products because of this. As far as I know the Canadian steel is so much cheaper because the production is subsidized by the government. Canada is a bit more socialist than the US so the taxpayers foot the bill in getting industries the help they need. Result is that it's cheaper for us than US products.
Things like NAFTA are fair only when employers are playing on the same ground across countries and that just doesn't happen in this economy. US employers are -strapped- with taxes that other countries just don't see and sure as hell aren't helped out by the government. Save the "what about Enron" combacks too -- I'm talking about good honest businesses. We're fucked in a global economy.
As a Candaian living by our forest industry region this sounds exactly like the crap the americans gave us on our softwood.
I never realized how bad net porn was till I broke my arm
Because the South Korean government has repeatadly propped up a dying company that dumps product onto the market below cost?
You mean, like the US is doing with steel, agriculture, airlines, and defense contractors?
we can get rid of the last vestiges of this type of protectionism
"Vestige"? This isn't a "vestige", it's worse than it has ever been.
I think all nations should just drop the pretenses of "fairness" and "openness" and just assume that protectionism is a fact of life. Then, democratically elected governments can negotiate about it rationally and without all the bluster and lies, and without having the WTO interfere.
Korean chaebol developed with close ties to and huge amounts of funding from their government, so I wouldn't be surprised if the American allegations here are true.
For my source and an understanding of this important country, see Bruce Cumings' brilliant and excellent Korea's Place in the Sun. My dear professor from this spring [who is a friend of Cumings] teaches the book, and my dear friend at the U. of Chicago has Cumings as his professor. He probably understands Korea as well as anyone outside that nation.
I see so many people here falling into the contra-positive of the broken window fallacy it is scaring me.
There is a shop with a store front window. A vandal comes by and throws a rock right through the window. At first the store owner is disstressed about this. However, he then realizes even though he has to pay for a new window and installer. The window guy will in turn hire a plumber, who will buy a sandwich, the chef will buy a microwave, the consumer electronics guy will buy something from his shop. It will be great for everyone. Accordingly, he decides we need more vandals to make the world a better place. You heard a lot of this weak argument during 9/11. Although, 9/11 is more complex since it involved huge sums of insurance money, reinsurers, etc.
What is wrong with this argument? Well, the answer is simple the store owner would have spent his money on something else beside the window. While the window guy is certainly happy, the refridgerator guy is now seriously bumming that he didn't get a sale. Or let's say he bought the window instead of shoes, the shoe guy would be bumming.
Now I have seen several people arguing the South Korean government subsidizing memory is bad for the United States. This the broken window fallacy in REVERSE. When someone gives you something it is a net positive. It's better than if you had made it yourself. You now have money you can spend on other things. While it might be hard for micron its GOOD for computer users. They will have more money to spend on new nVidia GeForce 5800FX Ultra Deluxe Turbo Gold Millenium Edition cards or whatever.
Remember, other peoples governments giving us money (even in the form of memory) is a good thing for our economy. Don't be led into this fallacy that its more important to keep our money "internal." The greedy strategy tends yield an amazingly near optimal solution. Government intervention will always lead something ineffecient taking place.
Yes, there is the case where there could be a strategic move to lower prices to force out a competitor and in the long term raise prices. However, this market has way too many firms for any one firm to gain that kind of control.
I would much rather have more money rather than letting the U.S. government and Micron have it. As a side note, luckily they didn't implement quotas which would have just given Hynix the ability to sell at a higher price...
Hmmm. You weren't around the last time this happened were you?
The main result of the last RAM tarrif was to throw all of North America into a deeper recession than it already was, and the economy at that time was in much better shape then than it is currently. Everybody else in the world got cheap RAM except the US and Canada. We got all that nice expensive RAM that was produced by the one company in the US that still manufactured it. As I recall, the one protected company still went tits up.
I guess it will all work out better this time around. Computers and embedded systems are too cheap right now, we really should double the prices so that we can keep electronics out of the hands of consumers. Y'all might want to ask your parents about how the computer industry <sarcasm>surged</sarcasm> during the Regan years.
If a foreign country wants use their citizen's tax dollars to support our computer consuming habits, let 'em I say.
Well no you are right, all the jobs should be kept here.
I'm bitching at the President because hes the leader of the free world and hes not doing shit. Hes not doing anything at all to improve this economy, he has done absolutely NOTHING thats why I bitch.
Until he produces results, I'm going to be pissed, oh and wheres Bin Laden, wheres Saddam? Wheres the weapons of mass destruction? Why arent our borders secure?
Oh and Bush is currently being investigated, for all we know the whole Iraq war could have been one big hoax.
If you use Linux, please help development of Autopac
I live in Boise, ID, headquarters of Micron Technology. Micron is the the largest private employer in Boise (and Idaho, for that matter), so criticizing the company is often risky business considering all the company loyals in town, as well as the clout they hold on local leaders. There has been almost no direct negative press about MU in the local newpapers or media.
In January, Micron CEO Steve Appleton held a press conference and announced a "product misstep" was to blame for several quarters of steep losses. This "misstep" is Micron's leapfrog to DDR400, which essentially left them out of the hot market for all of 2002. This press conference was covered lightly, and the media certainly didn't dwell on it this revelation.
By March, nearly everybody had forgotten about Appleton's admission of "misstep"ing the company into perpetual quarterly losses, and decided to go on the spin campaign. Another press conference was called to announce the company's losses were the fault of subsidized Korean chip maker Hynix. This time, every media outlet in driving distance was notified. U.S. Senator Mike Crapo was on hand to lend his support for the home-town corporation and blast the Korean government for propping up Hynix and running Micron into the ground. This story ran for several days in the local media.
Appleton masterfully deflected earnings shortcomings from himself to the Koreans, and at the same time positioned Micron to be the beneficiary of "emergency" protection from the the US International Trade Commision, the body who deals with trade complaints from US companies. Interestingly, according to US trade law, it is not necessary for the ITC to have conclusive evidence of dumping/subsidies/etc to grant short-term protective tariffs. They need only have proof that there may be "unfair" trade practices taking place. In addition, the ITC may levy countervailing duties against foreign offenders if a company is harned, or may be harmed, by fair and legal trade .
As with most protection, the consumer ends up footing the bill. The greatly inceased duty on Korean chips will drive up the price in the DRAM market and force US consumers to pay artifically high prices. Meanwhile, Micron recovers and Appleton saves face. These duties are NOT about Korean subsidies, they are about Micron trade protection wrapped in an All-American, patriotic, apple-pie-loving shell.
Just remember who's paying for the "product misstep": YOU!!!
The US is certainly very good at hypocrisy, I suppose that comes with diversity and arrogance ;)
Here is an excerpt :-
THE founding myth of the dominant nations is that they achieved their industrial and technological superiority through free trade. Nations that are poor today are told that if they want to follow our path to riches they must open their economies to foreign competition. They are being conned. Almost every rich nation has industrialised with the help of one of two mechanisms now prohibited by the rules of global trade. The first is "infant industry protection": defending new industries from foreign competition until they are big enough to compete on equal terms. The second is the theft of intellectual property. History suggests that technological development may be impossible without one or both.
It seems the US and Britain were quite ruthless in their "infant industry protection".
Shame the article is locked up in the closed New Scientist archive. Great resource, well worth the subscription cost.