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U.S. Imposes Big Tariffs On Korean Chipmakers 827

Posted by simoniker
from the catfish-also-plan-to-sue dept.
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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U.S. Imposes Big Tariffs On Korean Chipmakers

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  • Coincidence? (Score:5, Insightful)

    by dolphin-brother (120776) on Wednesday June 18, 2003 @11:36PM (#6239623)
    Micron's lobbying wouldn't have anything to do with Micron posting a loss [reuters.com] last quarter, would it? Nah. Of course not.
    • Re:Coincidence? (Score:5, Informative)

      by HornyBastard77 (667965) on Thursday June 19, 2003 @12:09AM (#6239840)
      No I think it has more to do with Hynix making posting a loss [hynix.com] (of about $800 mil, and its operating loss). If they were able to recoup their costs then Micron's claims of them artificially deflating their prices would not hold much water. As it stands, this does appear to be a case of government aided dumping.

  • by Dr. Spork (142693) on Wednesday June 18, 2003 @11:38PM (#6239634)
    I hope you remember to giggle next time when you hear people from this administration talk about "market economics." This is not an isolated case. Take a look a steel tarifs, orange juice, and many other goods whose domestic producers have been loyal Bush lobbyists.

    Bush should be trying to stimulate the tech economy. Instead, he's killing the US$ to historic lows, and now this? Pretty weak!

    • Good one, isolated cases without proof. Not mentioning the number of fantastic things that Bush has done. It's always about "what do I get from the current president?" The man brought much needed integrity back to the presidential position. He is a strong leader in the time of terrorism, war and uncertain economies brought about by Bill Clinton. What more do you want? Nobody's perfect nor sees things your way all of the time. Give the guy a break.
      • by LostCluster (625375) on Wednesday June 18, 2003 @11:51PM (#6239730)
        I'm not quite sure you can claim Bush brought "integrity" to the office, he did afterall win with a margin of victory so slim it could have been overturned had disputed results in a territory run by his brother gone the other way... there's never going to be a scandal-free president ever again, especially when there's always more than half the nation looking for something to attack.

        You can't blame the residents of the White House for everything that goes wrong or assign them credit for everything that goes right. The real world is just a whole lot more complex than that.
      • 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...

        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 /invisable/ WoMD!).
        • (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)

          Um, that doesn't parse at all. Perhaps you are referring to the minor recession in 1991, which ended well before Clinton took office? At any rate, although the economy appeared strong under Clinton, we now know this was due to massive corporate fraud and the unsustainable tech bubble. Yes, I'm sure it's the Republicans' fault somehow, but to blame Bush for the downturn requir

      • by dvdeug (5033) <dvdeug AT email DOT ro> on Thursday June 19, 2003 @12:36AM (#6239995)
        The man brought much needed integrity back to the presidential position.

        Instead of getting blowjobs from the interns, he's putting felons, convicted for wrongful acts in high office (Poindexter), in high office again. I'd rather have integrity as president then integrity as a person, if I'm forced to choose.
      • Steel tarriffs. US steel manufacturers weren't competitive, and it was much cheaper to import steel from elsewhere (eg, Russia) than to buy it from US makers.

        The Dubya solution to this problem? Slap heavy tarriffs on imported steel.

        So much for fair trade, a free market and a unhindered economy.

        It's not like that's the only example either. US lumber mills are less productive and more expensive than their Canadian counterparts, who've spent considerable millions becoming more efficient and cost effective.
    • by Goonie (8651) * <robert,merkel&benambra,org> on Wednesday June 18, 2003 @11:51PM (#6239732) Homepage
      The USD is way, way, way, overvalued, because of the huge capital inflows to the US, thus making American exporters uncompetitive and American manufacturers in the domestic market uncompetitive with imports. Falls in the US dollar will help restore balance to the US economy. It might be a little hard on US consumers as imported goods get more expensive, but a stimulated US economy is a good thing for the US and indeed the world.

      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.

    • What dickhead modded this flamebait? He makes an excellent point. Some tarriffs are legit, but on others you need only follow the money trail. Great way to treat our "closest ally" in the region, who we're already very unpopular with. If someone put a tarriff on us, we would throw sanction after sanction on them (remember when Japan put a tarriff on us for cars I think in the 90s? And we put about a 100% tarriff on Japanese cars? Fair or not, we did it). Guess the Chinese and Taiwanese plants'll be doing better.
    • by Sokie (60732) <<jesse> <at> <edgefactor.com>> on Thursday June 19, 2003 @12:00AM (#6239793)
      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.

      Here's a couple links to Hynix's most recent multi-billion dollar bailout.
      http://www.news.com.au/common/story_page/0,4057,57 71168%255E15316,00.html [news.com.au]
      http://www.geek.com/news/geeknews/2002Dec/wbc20021 230017953.htm [geek.com]
    • by pi_rules (123171) on Thursday June 19, 2003 @12:02AM (#6239804)
      This is not an isolated case. Take a look a steel tarifs, orange juice, and many other goods whose domestic producers have been loyal Bush lobbyists.


      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.
      • by WatertonMan (550706) on Thursday June 19, 2003 @12:43AM (#6240032)
        I may well be incorrect, but I seem to recall that the problem was that many of the American steel mills were simply not well designed. The ones using newer designs *can* compete. The problem is that those which can't get no aid.

        The complaints against Canada are typically that socialized medicine and so forth lower costs. I suppose that is true to an extent. But, as someone else mentioned, the large number of easily accessable trees also does.

        There never is a truly level playing field. Complaining about that and then asking for tarriffs is akin to asking that the kid in class who gets all the A's ought to be penalized a few points because the rest aren't as smart.

        Don't get me wrong. There are times when tarrifs are appropriate. But thus far the US isn't doing too well with the WTO.

    • by Fishead (658061) on Thursday June 19, 2003 @12:06AM (#6239824)
      In Canada we have these things called "Large Forests". In these "Forests" we have large amounts of "Trees". Because we have so many of these "Trees", it is cheaper for lumber companies to harvest, and make "Lumber". This "Lumber" can be sold cheaply to countries where the lumber companies must pay high prices in order to harvest their small number of "Trees". Apparently this is unfair to the Bush administration. Hence we have ~30% tariffs on our lumber. But hey, our dollar is going up and theirs isn't so PBTBTBTBTBT :-Ãz
    • Good -- have you ever considered the negative aspects of free trade on our economy?

      Just in case you haven't noticed, virtually all manufacturing operations have moved to Mexico or China. Now computer geeks are in trouble, as most big software makers are exporting technical jobs to India and China.

      Bush is doing the right thing. Drop the price of the dollar to give struggling US industries a chance to export something and impose tariffs to raise revenue and level the playing field.
  • Business as usual (Score:5, Insightful)

    by SAN1701 (537455) on Wednesday June 18, 2003 @11:38PM (#6239636)
    Demand free trade to 3rd world countries, close the internal market. Nothing to see here.
    • by Chuck Chunder (21021) on Wednesday June 18, 2003 @11:52PM (#6239736) Homepage Journal
      of the 190 billion [www.cbc.ca] in subsidies the American Government will be passing out to farmers over the next ten years.
    • Re:Business as usual (Score:4, Interesting)

      by Tiro (19535) on Thursday June 19, 2003 @12:53AM (#6240082) Journal
      Demand free trade to 3rd world countries, close the internal market. Nothing to see here.
      Sure, but in this case, the Republic of Korea's development is entirely due to cash pumped in to the country through and after the Korean War [plus a ton of hard Korean labor, but the effort would have been futile without our cash].

      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.

  • Well (Score:5, Insightful)

    by 7x7 (665946) on Wednesday June 18, 2003 @11:39PM (#6239645)
    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?
    • Re: Well (Score:5, Insightful)

      by Black Parrot (19622) on Wednesday June 18, 2003 @11:53PM (#6239741)


      > Free trade? Or free trade only when it's good for us?

      For a curious conception of 'us'.

    • Re:Well (Score:5, Insightful)

      by afidel (530433) on Wednesday June 18, 2003 @11:54PM (#6239754)
      Because the South Korean government has repeatadly propped up a dying company that dumps product onto the market below cost? This is generally considered a bad thing and if we can get rid of the last vestiges of this type of protectionism (all countries are guilty of it to some degree, the Americans subsidize their farmers as do the French, etc) then maybe free trade might eventually become a reality, but as long as one country is proping up some sectors and allowing them to undercut the rest of the market free trade without sanctions is kind of a pipe dream.
      • Re:Well (Score:3, Interesting)

        S Korea works like that though. all of their companies are diverse producers like GE is.

        the Government tells them what to build and they build it.

        government controled capitolism...a weird idea but it seems to work in most cases.

        the government does not mind itself with the running of the business like in communism, but if there is a product that they want built, they tell a company...normaly a well run one to build it.

        it is very efficent in many ways.
      • Re:Well (Score:5, Interesting)

        by 73939133 (676561) on Thursday June 19, 2003 @12:44AM (#6240038)
        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.
        • Re:Well (Score:5, Insightful)

          by Alsee (515537) on Thursday June 19, 2003 @01:31AM (#6240251) Homepage
          I think all nations should just drop the pretenses of "fairness" and "openness" and just assume that protectionism is a fact of life.

          Protectionism is a harmful and ultimately self destructive practice. Unfortunately there are always self serving groups pushing for these sorts of measures. Protectionism should not be accepted as a "fact of life".

          Protectionist policies were one of the reasons the great depression was so deep and long. When things started to go sour countries all over the world starting implementing these kinds of policies to "protect themselves" and international trade came to a grinding halt.

          On the other hand world trade treaties do recognize a right to retaliate to unfair trade practices. I don't know much about what's going on with the South Korean chips, but if they are in fact dumping them below cost then tariffs are permitted.

          -
      • Re:Well (Score:5, Interesting)

        by altstadt (125250) on Thursday June 19, 2003 @02:08AM (#6240370)

        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.

      • Re:Well (Score:5, Insightful)

        by Arker (91948) on Thursday June 19, 2003 @04:06AM (#6240800) Homepage Journal

        Because the South Korean government has repeatadly propped up a dying company that dumps product onto the market below cost? This is generally considered a bad thing and if we can get rid of the last vestiges of this type of protectionism (all countries are guilty of it to some degree, the Americans subsidize their farmers as do the French, etc) then maybe free trade might eventually become a reality, but as long as one country is proping up some sectors and allowing them to undercut the rest of the market free trade without sanctions is kind of a pipe dream.

        You're fundamentally mistaken. Protectionism on their part doesn't justify, necessitate, or in any way indicate the wisdom of protectionism on our part. They're (assuming the allegations are true, and they probably are) shooting themselves in the foot, so therefore we must shoot ourselves in the foot also? How does that work?

        If you want free trade, drop your trade barriers. Simple as that. If other countries do not then they will pay for that decision. You don't need to do anything to make that happen, it's just like jumping off a building makes you go splat. If the vietnamese want to lose money selling catfish (and that particular allegation I don't believe for a moment, but assume it's true for sake of argument) then let them! Enjoy the cheap catfish while it lasts. Mothball those catfish farms and do something more productive with your time and capital. When they wise up or run out of money and the price goes back up to where it makes sense to compete again, then jump back in. That's just economics 101.

    • Re:Well (Score:3, Insightful)

      by Dr. Bent (533421)
      Oh yeah right, typical Slashdot M.O.

      1) Blame America
      2) Read article*

      (*)This step is optional, and not recommended if trolling for karma.

      In the first sentence of the article, it says the tariff is in reponse to subsidies provided by the Korean government. The U.S. is re-balancing the field, and is more than entitled to impose a tariff on a subsidized product when it competes with products made in the U.S.
      • Yes and.. (Score:4, Insightful)

        by Kwil (53679) on Thursday June 19, 2003 @02:21AM (#6240432)
        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.
    • Re:Well (Score:3, Insightful)

      by Ralph Wiggam (22354) *
      Have you been watching the news for the past 9 months? There's a fat rule book for them and a skinny rule book for us. If you bitch about it, we'll bomb your commie terrorist ass.

      -B
  • Club stomped upon (Score:4, Insightful)

    by canuck_wingnut (319719) on Wednesday June 18, 2003 @11:41PM (#6239656)
    Sombody took a cue from the dorks trying to destroy the Canadian lumber industry, I see.
    Korea, welcome to the club.

    ------------------
    "nosce te ipsum"
    ------------------
  • MTF (Score:3, Informative)

    by bazabba (669692) on Wednesday June 18, 2003 @11:41PM (#6239660) Homepage
    MakeTradeFair.com [maketradefair.com]
  • by Anonymous Coward on Wednesday June 18, 2003 @11:43PM (#6239672)
    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.
    • by afidel (530433) on Wednesday June 18, 2003 @11:57PM (#6239772)
      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.
    • That's pretty funny.

      Baseline magazine profiled US Steel a few months ago. Thanks to robotics and other automation, it takes 2 workers to produce a quanity of steel that 35 Koreans produce. They also make the steel for at 1/5 of the cost of the Koreans.

      So why has US Steel been near bankruptcy for years? Pension & Healthcare costs (many government mandated), which consume nearly 80% of revenues.

      If you want the trappings of a civilized society, (things like disability insurance, healthcare, pensions) th
  • Tariffs are wrong... (Score:5, Interesting)

    by Sri Ramkrishna (1856) <[sriram.ramkrishna] [at] [gmail.com]> on Wednesday June 18, 2003 @11:44PM (#6239675)
    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
    • So then you don't have problems with flooding the market with undervalued products to eliminate competitors.

      Microsoft will be glad to know the Open Source community has come around to its way of thinking.

      Thanks.

    • Would you like a job with that RAM chip?

      That's the problem here, South Korea got caught giving a subsidy to a failing company which enabled it to continue to operate at a loss when it rightfully should have gone out of business. As a result, Micron got less sales, and that means Micron ends up hiring less Americans. The only fair thing to do is for the USA give Micron a subsidy at the cheater's expense...
    • by xombo (628858) *
      The only way for a company in the US to compete with a 3rd world one and still give high paying jobs to it's employee's is through tarrifs, so we get both high paying jobs and a little more cost in products, it's how it is and how it always will be, it keeps us out of poverty by making us have to pay a certain amount of money so we will buy internally. It is good for our country, bad for smaller ones, but I think smaller countries need to rely on themself and not sales from the USA. The low foriegn prices a
      • by Tsian (70839) on Thursday June 19, 2003 @12:47AM (#6240052) Homepage
        So why, exactly, does the US like to beat the free trade drum?

        Because it's no tariffs on the products they export, but they can put tariffs on anything they decide deserves it.

        That isn't free trade.

        Personally, I don't want free trade. Most people don't want free trade. But if you are going to ram it down our throats you may as well actually let the populace see the full effect of it.
      • by Kunta Kinte (323399) on Thursday June 19, 2003 @01:01AM (#6240118) Journal
        The low foriegn prices are not worth the loss of local jobs. Every country needs to be a little independant.

        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.

      • by thefinite (563510) on Thursday June 19, 2003 @02:20AM (#6240426)
        Sorry did you say *little* more cost? Try $50 Billion/year for us and $150 Billion a year for the third world. link [byu.edu]. 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.
    • by Dr. Bent (533421) <ben@int.cLAPLACEom minus math_god> on Thursday June 19, 2003 @12:14AM (#6239876) Homepage
      Yes, Corporate Welfare is wrong. And that's exactly what the South Korean government is doing. If you had bothered to read the first paragraph of the article you would know that the reason the Commerce Department is levying this tariff because it believes the Korean government is illegally subsidizing chip exports.

      This tariff is just leveling the playing field, but "U.S. imposes chip tariff in response to Korean subsidy" doesn't draw nearly as many eyeballs to the advertisements below the article.
    • by 1010011010 (53039) on Thursday June 19, 2003 @01:00AM (#6240111) Homepage
      How is a company supposed to "compete" with South Korean government subsidies? The Korean taxpayers are subsidizing the low cost of Hynix products. Why *shouldn't* the U.S., and E.U., apply a tarriff to Hynix products? Should the U.S. and the E.U. allow countries like S.K. and companies like Hynix destroy their native industries? No. Should they subsidize their native industries in return? No. Should they apply a tarriff that negates the effects of the South Korean subsidies? Yes!
  • This is bad... (Score:5, Insightful)

    by leviramsey (248057) on Wednesday June 18, 2003 @11:44PM (#6239679) Journal

    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!

    • Re:This is bad... (Score:3, Informative)

      by HardCase (14757)
      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).

      Actually, it doesn't. Maybe prices will go up, maybe they won't, but because memory is a commodity, Micron doesn't simply set a price and everybody pays...the prices are negotiated just like any other commodity. Also bear in mind that the duty is applied to chips and chips alone. If the chip

  • by Anonymous Coward on Wednesday June 18, 2003 @11:46PM (#6239697)
    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?
  • by red_dragon (1761) on Wednesday June 18, 2003 @11:46PM (#6239702) Homepage

    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%. [theregister.co.uk] Also, the US is not the only one sticking it to the Koreans: the European Commission smacked them with a 37% duty [theregister.co.uk] too.

  • Why? So they can be fried instead of eaten raw?
  • by Chalst (57653) on Wednesday June 18, 2003 @11:48PM (#6239709) Homepage Journal
    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...
  • by Red Meanie (672769) on Wednesday June 18, 2003 @11:49PM (#6239717) Homepage
    The US is doing exactly the same thing to BC. If a non-US market is more competitive than an American producer, the American government slaps a huge tariff.

    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.

    • by 1010011010 (53039) on Thursday June 19, 2003 @01:13AM (#6240179) Homepage
      The South Koreans will not win, because they are the ones giving the illegal subsidy to Hynix. Did you read the article? Or is it easier to jsut assume the U.S. is wrong? I admit, it is a time-saver.

      Do you have any opinions on the tarriffs the E.U. applied to Hynix?

  • Mostly good (Score:5, Informative)

    by afidel (530433) on Wednesday June 18, 2003 @11:51PM (#6239726)
    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.
  • Corruption. (Score:5, Insightful)

    by YahoKa (577942) on Wednesday June 18, 2003 @11:51PM (#6239731)
    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 ...
  • by djupedal (584558) on Wednesday June 18, 2003 @11:54PM (#6239752)
    Samsung,
    Samsung,
    sell me some dram please.

    I use Samsung,
    and I pay just the price that I please.

    There are no lousy tariffs,
    to mess with me or the Sheriff.

    So up the price,
    for Hynix rice,
    and I'll go on my way like the brezzeeeeee!
  • by jrl87 (669651) on Wednesday June 18, 2003 @11:58PM (#6239779)
    but isn't this essentially what caused the Boston Tea Party. I know that the markets have to be regulated to some extent, but the government should not be allowed to grant a monopoly or break up a monopoly (unless it was formed illegally) that was built from the ground. And that is basically what they are doing, even if it doesn't seem like it now but it is a real possibility in the future.

    • but isn't this essentially what caused the Boston Tea Party. I know that the markets have to be regulated to some extent, but the government should not be allowed to grant a monopoly or break up a monopoly (unless it was formed illegally) that was built from the ground. And that is basically what they are doing, even if it doesn't seem like it now but it is a real possibility in the future.

      I'm not sure if you're right or you're wrong...I don't think that your analogy fits the situation because no monopol

  • by Anonymous Coward on Thursday June 19, 2003 @12:00AM (#6239791)
    From Cringely's "Accidental Empires": [amazon.com]

    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.
  • by confused philosopher (666299) on Thursday June 19, 2003 @12:02AM (#6239805) Homepage Journal
    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.
  • In Other News... (Score:3, Insightful)

    by BiggerIsBetter (682164) on Thursday June 19, 2003 @12:03AM (#6239808)

    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.

  • by Cyberllama (113628) on Thursday June 19, 2003 @12:10AM (#6239847)
    The WTO is always rules against protectionist tarrifs and environmental laws. I dont' have the exact statistics with me, but in an INSANELY high number of cases, the WTO has ruled in favor of the country issuing the complaint. Off the top of my head, i'd say its around 90%, but I'm sure someone out there can find the exact number.

    I can't see any reason why this would be different. It seems highly likely that the WTO will rule in favor of Korea blocking this particular tariff.

    I'm torn on this. I despise the WTO and how they have the power to to step in and tell our democratically elected government what to do, but this might be the one time I'll be glad for their interfering. I gots to have my computer parts on the cheap. . .
  • by whitecanuck (681720) on Thursday June 19, 2003 @12:12AM (#6239866)
    As a Candaian living by our forest industry region this sounds exactly like the crap the americans gave us on our softwood.
  • by davejenkins (99111) <slashdot@davejenki n s . c om> on Thursday June 19, 2003 @12:14AM (#6239875) Homepage
    While I am an avid free-trade advocate, I must back the US position on this one. Hynix has been bailed out a number of times by Seoul, and they've recieved enormous tax breaks.

    The 44% tarriff is excessive, but that's the whole point: it's a slap in the face to wake the Koreans up. Eventually, this will get watered down in the WTO, but not until the same WTO pushes Seoul to tone down it's own corporate capitalism efforts.

    I see all the standard anti-US rhetoric is in full swing already, so I won't broach that one....
  • by ee_moss (635165) on Thursday June 19, 2003 @12:34AM (#6239986)
    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.
    • by Qrlx (258924) on Thursday June 19, 2003 @12:58AM (#6240104) Homepage Journal
      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.
  • Turnabout... (Score:5, Informative)

    by Orne (144925) on Thursday June 19, 2003 @12:39AM (#6240018) Homepage
    I refer you to a United States Office of Trade Representative on the trade balance for Korea in 2000 [ustr.gov], outlining what tariffs are in effect for Korea. Some examples:
    - "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 [cia.gov], 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 [csmonitor.com] 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."

  • by andrewski (113600) on Thursday June 19, 2003 @12:51AM (#6240074) Homepage
    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?
  • The South Koreans plan to appeal to the World Trade Organisation.

    Ummm ... 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!!!
  • by z4ce (67861) on Thursday June 19, 2003 @01:10AM (#6240161)
    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...
    • by Forkenhoppen (16574) on Thursday June 19, 2003 @02:24AM (#6240445)
      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.

      This is a flawed argument. The idea isn't to keep the money internal; the idea is to maintain the stability of the businesses involved.

      In a typical free market situation, you have different companies vying against eachother for a slice of the same pie. Their products may not be completely identical, but the idea is that the best ideas, the best products, the best business plans, will eventually win out.

      Now in this instance, we have a business which is close to collapse. So what happens if, on the way out, Hynix temporarily becomes the primary seller of DRAM chips on the market? Let's say that the products of this company and Micron are similar enough, and everyone switches to Hynix chips. Assume Hynix really is going to collapse; what happens to Micron?

      First, they reduce costs, trying to compete. Then, when they find they can't attract the demand, they shut down production lines, sell plants. If things get far enough along, they may have to start pulling funding for R&D, which will hurt them even more later on. It could take them years to retool, to recover, to refinance their R&D divisions, after such problems.

      Now what happens to everyone else, if Hynix collapses? Companies that rely on a steady flow of parts could be ruined by this, as they suddenly have nowhere to turn to for the pieces they need. They may find parts at a higher price, but that will still raise their costs, making it difficult to compete. Possibly even against themselves, if a large quantity of a previous version of their product is already out there, and was cheaper prior.

      Now I'm not saying they're at this stage right now, and I'm not saying they're necessarily even headed for this stage. Micron seems like they're a pretty popular, thriving company at the moment. But depending on how long South Korea keeps Hynix on life support, they could last just long enough to really screw things up for several companies. With Hynix hanging on, newcomers will have a hard time getting a foothold in the market, as Hynix's chips stay at an artificially low price.

      Getting back to your statement, I don't think that the government being involved in something necessitates that it become inefficient. In fact, I think it's rather important to have the government involved in all major business decisions, especially those involving monopolies or companies in near-monopoly positions. Without the government, companies would become "too" efficient, and I'm convinced that most would just start sucking money directly out of our bank accounts, given the opportunity. It is, after all, the most efficient business model you'll ever see.
  • by countach (534280) on Thursday June 19, 2003 @01:18AM (#6240199)
    Micron will gain market share in the US, but it will lose market share in the rest of the world as the Korean firm moves all their output to other places. As Micron loses world share they have to dump all their production in the US, depressing prices. Net effect on prices in the US? Nil. Net effect on prices in the rest of the world? Nil.

    And don't forget that pre-built computers can still get in the US with Korean DRAM with no tariff. This only applies to DRAM not in a computer already.

  • by odin53 (207172) on Thursday June 19, 2003 @01:19AM (#6240208)
    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.
  • by tuxathon (626627) on Thursday June 19, 2003 @02:55AM (#6240578)

    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 [idahostatesman.com] 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 [idahostatesman.com] 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 [usitc.gov], 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!!!

  • by Craggles (65757) on Thursday June 19, 2003 @08:52AM (#6241821)
    If you are a subscriber to the excellent magazine "New Scientist" [newscientist.com], they have a great opinion article [newscientist.com] about this.

    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.

    • by TheSync (5291) on Thursday June 19, 2003 @02:03PM (#6245161) Journal
      On the other hand, every poor country that has become developed (mainly the "Asian Tigers") have done so to a large extent through the use of trade to leverage their economies.

      So while these countries certainly engaged in government-lead industrial policy, without being able to trade with other countries (especially the US), they would still be poor today.

      Moreover, it is looking like once countries achieve a certain level of development, government-lead industrial policy begins to fail them. Korea and Japan came a long way, but are now stagnating and trying to reform into more fully free-market economies, but the siren song of protectionism keeps them from moving forward.

      Meanwhile, I can assure you there is no benefit to the US limiting trade with anyone. If they want to sell us cheap DRAM, damn, let's buy it up!

"Consistency requires you to be as ignorant today as you were a year ago." -- Bernard Berenson

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