International Polices & Disputes

Juan Jose Ibarra Constantino Bruno Arruda Andrade Luis Carlos Mira Ricardo Emmanuel Garcia Caballero

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United States and Europe Community – South KoreaSemiconductor (DRAM) dispute Group 5. Thunderbird School of Global Management – 08/09/11 Briefing During 2001 an important trade dispute between US/EU and South Korea started over the allegation that S. Korea’sgovernment was helping up Hynix & Samsung Electronics, two of the world’s biggest players in the semiconductor industry. Hynix economic situation during 2001 and 2002 was difficult. They had torestructure a $7 billion dollar debt in order to continue in business, and found help from bank institutions owned by the Korean government that deployed a series of rescue packages (Manyian 2004). MicroTechnology built a countervailing duty case against this protective policy orchestrated by the Korean government, arguing that it was one of the main drivers of the dramatic plunge in global DRAMprices between 2001 and 2002. With the financial help given to Hynix they were able to export their product at much lower prices compared to their competitors. The case was won by Micron and resulted in a44.21% punitive tariff (Manyian 2004). Micron European Unit also led a similar case with the European Community and this process finished with the imposition of a 34% tariff. Korea decided tochallenge this two situations in the WTO, and in a first instance won both cases. But the US appealed the committee final report, and the US punitive tariffs were maintained. Hynix was able to surpass theserestrictions with the plant they have in Oregon which had the capacity to fulfill US market. The tariffs only affect products manufactured inside North Korea so this plant is not affected by thetariffs. Other Hynix overseas plants in Asia (Taiwan & China) can also react to chips demand not affected by the tariffs. (2005 Korea Times)

Countries/region in dispute United States, European...