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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."
Micron's lobbying wouldn't have anything to do with Micron posting a loss last quarter, would it? Nah. Of course not.
ft
eetuk
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Bush should be trying to stimulate the tech economy. Instead, he's killing the US$ to historic lows, and now this? Pretty weak!
Demand free trade to 3rd world countries, close the internal market. Nothing to see here.
If the U.S. is going to get itself involved in the WTO, it should learn to play by it's own rules. Free trade? Or free trade only when it's good for us?
Sombody took a cue from the dorks trying to destroy the Canadian lumber industry, I see.
Korea, welcome to the club.
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"nosce te ipsum"
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MakeTradeFair.com
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
This gives Micron carte blanche to raise their prices by 44%, which while it may save a few jobs in Idaho, will ultimately cost even more jobs at US companies that buy memory (think the likes of Dell and so forth).
Tariffs BAD! Free trade GOOD!
What? I am missing some hot chicks because I use Mozilla? WTF is happening? How about posting a image url? :Ãz
US government imposes tariffs due to foreign subsidised business selling into the US market.
Pot calls kettle black.
The US government is the worst offender on Earth with subsidising industries to kill foreign competition.
Is the free market being peddled by the US so hard to implement on their own shores? Do they hate others using their own tactics against them?
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?"
Just like we tax polluting fuels to encourage alternatives, this would have a very positive effect on "alternative" operating systems.
I don't suppose too much of the US computer industry will be happy about this, seeing as it is bound to drive up prices when the sector is on the edge...
Exactly the same thing happened with Canadian softwood lumber even though we have a supposed free trade agreement. It'll go to the WTO, the S. Koreans will win but that'll take years. In that time, their industry is crippled.
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.
Welcome to the invisible corruption. The consumer now supports micron to be inefficient, and looses out big time. If Korea was subsidizing their DRAM makers, we should be happy: That would mean their tax payers are paying for us to have cheap memory. However, since Micron gains with the tariffs, the gains are concentrated to one company and they lobby (probably pay) government officials for the tariffs. Such a shame, because it happens much more than we know about; this is on slashdot because it is about DRAM. If only everyone could see ...
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?)
of the 190 billion in subsidies the American Government will be passing out to farmers over the next ten years.
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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!
Micron is NOT inefficient, in fact they are one of the more healthy memory makers, it's just that they can't compete with a government propped business that dumps chips below production costs. The EU is not very happy about Hynix either so it's not just the American's protecting a weak company.
There are 4 boxes to use in the defense of liberty: soap, ballot, jury, ammo. Use in that order. Starting now.
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.
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?
Hynix announces high volume trade agreement with major EU computer retail chains. Maybe. If the US doesn't want cheap good stuff, other countries will be happy to take it.
This sort of carry-on is why many countries no longer give a toss about "free trade" agreements with the US - they're not worth the paper they're written on if the gubment feels so inclined.
Forget thrust, drag, lift and weight. Airplanes fly because of money.
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)?
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
I think it's great that the U.S. finally gave Hynix the boot. The S. Korean government has been keeping them alive and competing with our companies, even though Hynix has failed to produce a profit and would basically go in the red if it weren't for all the government money keeping it alive.
Companies like that deserve to die - if you're not producing a profit, and you're causing U.S. companies to lose money, why should the U.S. continue to allow you to do business with us? It's our semiconductor industry vs. the entire south korean government - that's bad for the people who work at micron and other semiconductor companies. Think about the people trying to make a living here, for pete's sake.
It's hard enough dealing with domestic competitors, let alone an entire foreign government. 100% tariff would do just fine too.
- "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."
But, as I've said, it's no news. Recently, U.S. Gov. has put huge barriers against steel from others, more competitive countries (Brazil, E.U., etc.).
U.S. preaches capitalism to the world, and, by the way, I have nothing against that. But, when others show themselves better than U.S. in some tiny economic niche, all the courageous, competitive dogma goes away and "protective tarrifs" come in place.
Wasn't big american companies also subsidized? Airlines, Aerospace companies, etc...? What is so different with South Koreans?
What's good for the steel manufacturers (high tarriffs on foreign steel imports) isn't good for steel consumers.
Why should construction companies, etc have to pay an artificially inflated price for a vital commodity? Why should a shipyard on either coast have to support a steel mill in the Midwest?
What you forget is that by making the US steel manufacturers more competitive, you're making US steel consumers less competitive. Overnight, these steel tarriffs have made it harder for US shipbuilders to compete in the global market. The same is true of other industries too.
So, in essence, Dubya is robbing Peter to pay Paul in the hope that he can secure Paul's vote in the future and that Peter won't notice.
Yay for free trade!
"Accept that some days you are the pigeon, and some days you are the statue." - David Brent, Wernham Hogg
You don't see the FDA slamming down on southern producers who label Bullfish as Catsish, why would we unfairly require the vietnamese to make a distinction between their not-quite catfish and our not-quite catfish?
if you're not producing a profit, and you're causing U.S. companies to lose money, why should the U.S. continue to allow you to do business with us?
Hmmm. Let's outlaw the U.S. Post Office then. Seriously, does this bit of extremism apply to U.S. companies that aren't turning a profit, and competing with other U.S. companies? Or just foreign companies?
For that matter, what makes a U.S. company a U.S. company? Most of the big corps are technically out of The Bahamas or similar countries who've found a nice little niche by shielding companies from the tax men of the countries in which they do business.
I'm no economist, but I think it's pretty obvious that whatever governmental assistance Seoul provides Hynix is pretty much being met tit-for-tat, and then some, with this tarriff. Not surprising that Washington would choose this tactic, though, since they've already imposed tarriffs on Canadian lumber and European steel. While these tarriffs certainly protect American jobs, a cynical view is that the imposition of these tarriffs is not so much about protecting our economy, it's more about protecting electoral votes in Pennsylvania. Though that argument doesn't make a lot of sense when applied to Washington timber. It does make sense in Micron's home state(s) of Idaho (and Virgina, after acquisition of Toshiba's facilities there).
Political cynicism aside, one thing I did learn (Bueller? Bueller?) is that the Hawley-Smoot Tarriff Act was the proverbial straw that broke the camel's back and led to the Great Depression. Is saving the White House worth a repeat of that?
Finally, you end with the statement "It's hard enough dealing with domestic competitors..." Which domestic competitors are you talking about? Who else makes DRAM in the USA? I was under the impression that Micron was it.
To sum up: I guess we should go ahead and slap a huge tarriff on Airbus as well! Because surely the American consumer will benefit when Boeing, protected by exorbitant tarriffs, can charge the airlines whatever they please for a new 737.
Man. Are you lost.
The US is one of the world's largest manufacturers and exporters. Why do you think most large US companies have sales offices all over the world. Think IBM, Microsoft, Oracle. Equipment manufacturers like Caterpillar. Telecom like ATT. All these firms bring in a large amount of money from foreign countries.
Get this straight. The problem is not that small countries rely on the US for handouts. The problem is unfair trade policies that actualy hinder these countries ability to compete.
Policies like demanding they open their markets while protecting yours.
Based on upvotes, Ageism is the only "-ism" Slashdotters care about and think isn't SJW
The South Koreans plan to appeal to the World Trade Organisation.
... so?! Last time I checked, America, for better or worse, does whatever the hell it damn well pleases. We didn't need NATO's permission to go bomb the crap out of Iraq, and we sure as hell don't need the WTO's permission to levy tariffs on U.S. imports!!!
Ummm
Cyde Weys Musings - Scrutinizing the inscrutable
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...
Homer: Lisa, a guy who's got lots of ivory is less likely to hurt Stampy than a guy whose ivory supplies are low.
-- Simpsons [1F15] "Bart Gets an Elephant"
Carthago delenda est!
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.
Drat -- someone caught onto our scheme! I regret that our business arrangment has come to an end, because I was looking for more of your money to subsidize my continuing purchases of Korean memory products.
We both know that long-term, your largesse has one obvious effect, long-term: namely, that your money creates some great bargains for purchasers of specially-supported companies' products.
It was fun while it lasted, though. If you care to subsidize any other products, I hope you will especially consider paying for part of my next LCD panel; they're still more expensive than I would like, and it would be nice if you could chip in a few bucks.
Thanks in advance,
timothy
p.s. In regards to our prior correspondence: maybe I wasn't clear. No, I actually don't care to artificially prop up any domestic businesses to achieve some sort of artificial parity in price or export numbers. I'll consider it, but it seems pretty irrational, except on the part of the subsidized business.
jrnl: http://tinyurl.com/c2l8yr / foes: http://tinyurl.com/ckjno5
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
Sorry did you say *little* more cost? Try $50 Billion/year for us and $150 Billion a year for the third world. link. Steel tariffs alone are essentially paying US steel workers each something like $80,000 in inefficient prices. Yet they don't really make that much, even though we pay it. Poverty is not a measure of how much you make, but of how much you can buy. Tariffs *invariably* make consumers poorer.
Boom Shanka
That's exactly what the US said about softwood lumber. Despite the fact they've said it three times before and have been proven wrong each time,and despite preliminary rulings coming down suggesting they'll be proven wrong yet again.
It's also exactly what the US said with respect to Canada's grain industry, despite the nine previous times they've said so, and being proven wrong each and every time.
So you'll excuse me if I don't believe the US BS.
That Jesus Christ guy is getting some terrible lag... it took him 3 days to respawn! -NJ CoolBreeze
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!!!
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."
Like there is anything steel-specific in this...
All industries face that kind of price competition when they cease to innovate significantly. Decades ago, cloths, steel, shipyards, cars etc... became commodities and their production was gradually transferred to emerging countries. This is a Good Thing (TM) as it both lowers the price of standard products in developped countries while stifling growth and wealth in emerging countries.
The only solution for western producers is to continually innovate to support a superior price. Nowadays, nobody still produces cloth in developped countries except for high quality, high tech speciality stuff. The western car industry suffered tremendously in the 70's when the technology became mundane enough for Korea to mass-produce cars cheaply. The western industry reacted by a massive rightsizing, innovation (ABS, air-bags...), superior development process, better design and good marketing.
The steel industry is no different. The world's largest steel producer is Arcelor, an French-Belgian conglomerate. They have outsourced standard production to emerging countries and have developped high value added products (flat steels) that justify a double or triple price. And believe me, with all their taxes and social contributions, labor costs in France or Belgium are not cheaper than in the US.
Cost dumping will always exist. It drives costs down, stimulates innovation and allows third world development if managed correctly. Tariffs are a short-sighted answer. They delay the inevitable while artificially maintaining high prices and inefficient businesses.
It would be nice to be sure of anything the way some people are of everything.
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.