U.S. Imposes Big Tariffs On Korean Chipmakers 827
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."
Coincidence? (Score:5, Insightful)
Re:Coincidence? (Score:5, Informative)
Re:Coincidence? (Score:5, Informative)
There are very few examples of companies that lobby for a temporary import restriction, and actually use that timeframe to revamp their operations and compete successfully in the open market after the restrictions are lifted. The best example I can recall is Harley Davidson.
The Simpsons, from whom all wisdom flows... (Score:5, Insightful)
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" [snpp.com]
Re:Coincidence? (Score:4, Funny)
Two economists are walking down the street and see a $50 bill on the sidewalk.
The first economist leans over to pick up the bill, but the other second economist stops him. The Second Economist explains, "If it were worth picking up, someone would have done it already."
Yeah, this is Bush's version of "free trade" (Score:5, Insightful)
Bush should be trying to stimulate the tech economy. Instead, he's killing the US$ to historic lows, and now this? Pretty weak!
Re:Yeah, this is Bush's version of "free trade" (Score:5, Funny)
Re:Yeah, this is Bush's version of "free trade" (Score:5, Insightful)
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.
Re:Yeah, this is Bush's version of "free trade" (Score:5, Interesting)
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
Re:Yeah, this is Bush's version of "free trade" (Score:3, Insightful)
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
Re:Yeah, this is Bush's version of "free trade" (Score:5, Insightful)
So where are they?
Nobody, not the French or Hans Blix or anyone else has any kind of coherent evidence that indicates that these weapons were destroyed.
So where are they?
18 chemical-factory trucks.
Where?
1550 R-400 bombs.
Where?
7,000 gallons of anthrax.
Where?
572 gallons of concentrated aflatoxin.
Where?
15,000 gallons of botulinum.
Where?
500 tons of mustard gas, sarin gas and VX nerve gas.
Where?
If you are so retarded as to think that it is impossible to hide a bomb in a country the size of Iraq... you have other issues.
If it was a bomb, I could buy it. But we've been told there are many more weapons. That they were a threat to America, and the world. You'd think we'd have found something by now. We knew what they had, right? How come we can't find a single thing? Not one goddamn thing. And don't waste my time with the fucking 'chemical trailers.' I want to see barrels of anthrax. I want to see warheads with mustard gas, on missiles that can reach Washington. Show me. Just one. I'll believe you then. Just one.
And if you tell me they're in Iran, I weep for the world.
Re:Yeah, this is Bush's version of "free trade" (Score:5, Informative)
What's that? You didn't murder Jimmy Hoffa? Well, I don't need proof. I think you did. Tell you what, duffbeer703, I'm going to arrest you and execute you anyway. I know you did it, I just need a little more time to find the evidence. Would you prefer death by bunker buster, or M-16?
What's that? You'd rather I had proof before I convicted you?
That's just crazy talk.
p.s. The CIA helped the Iraqis gas the Kurds. Not to mention the U.S. sold them the helicopters. See this report [ithaca.edu] by a professor at Cornell, if your memory of history is a bit foggy.
Blatantly wrong... (Score:5, Informative)
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.
Re:Yeah, this is Bush's version of "free trade" (Score:5, Insightful)
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.
You want more proof? Here it is. (Score:3, Insightful)
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.
No, YOU are wrong (Score:4, Interesting)
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.
Lower dollar good for US companies... (Score:5, Interesting)
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.
Re:Yeah, this is Bush's version of "free trade" (Score:5, Insightful)
Re:Yeah, this is Bush's version of "free trade" (Score:5, Informative)
Here's a couple links to Hynix's most recent multi-billion dollar bailout.
http://www.news.com.au/common/story_page/0,4057,5
http://www.geek.com/news/geeknews/2002Dec/wbc2002
Re:Yeah, this is Bush's version of "free trade" (Score:5, Interesting)
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.
Re:Yeah, this is Bush's version of "free trade" (Score:5, Insightful)
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.
Re:Yeah, this is Bush's version of "free trade" (Score:5, Funny)
Re:Yeah, this is Bush's version of "free trade" (Score:3, Interesting)
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.
Re:Yeah, this is Bush's version of "free trade" (Score:3, Insightful)
No gain without pain (Score:4, Insightful)
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!
Business as usual (Score:5, Insightful)
Perhaps this 44% will offset a tiny part (Score:4, Interesting)
Re:Perhaps this 44% will offset a tiny part (Score:5, Funny)
Re:Business as usual (Score:4, Interesting)
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.
Re:How about charge extra for labor? (Score:5, Insightful)
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?
Well (Score:5, Insightful)
Re: Well (Score:5, Insightful)
> Free trade? Or free trade only when it's good for us?
For a curious conception of 'us'.
Re:Well (Score:5, Insightful)
Re:Well (Score:3, Interesting)
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)
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)
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)
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)
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:5, Insightful)
As a stockholder of Micron, when a vested interest in seeing Micron able* to make a profit, I do.
As a resident and homeowner in the Treasure Valley (Boise and surrounding area for non-Idahoans) where 12,000 people are employed by Micron, I do.
As a resident of Idaho, where (supposedly) one out of every twenty people is employed by Micron, I do.
As a resident of the US, where Micron is the *only* remaining US company producing dram, I do.
As a guy who's done his econ. homework and realizes that there are two outcomes from the current situation: eventual failure of all but a couple dram companies and resultant (bi|mo)nopoly pricing *or* return to free competition and fair pricing, I do.
But go ahead and demand 512Mb sticks of PC2700 for $30. I mean, after all, why should *you* care?
*not gaurunteed, just able. As Appleton is fond of saying, we'll compete with any company out there, but we can't compete against governments.
Re:Well (Score:3, Insightful)
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)
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)
-B
Re:You mean good for Bush, this isnt good for us. (Score:5, Interesting)
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.
Club stomped upon (Score:4, Insightful)
Korea, welcome to the club.
------------------
"nosce te ipsum"
------------------
Re:Club stomped upon (Score:5, Insightful)
Thats right, we are paying the lumber industry to not only cut down tree's inside national parks but to ship it below costs.
Then the US has the nerve to cry foul when Canada does the same thing.
MTF (Score:3, Informative)
Worst part is tariff goes directly to Micron (Score:5, Interesting)
Re:Worst part is tariff goes directly to Micron (Score:5, Insightful)
Re:Worst part is tariff goes directly to Micron (Score:3, Interesting)
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)
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
Re:Tariffs are wrong... (Score:3, Insightful)
Microsoft will be glad to know the Open Source community has come around to its way of thinking.
Thanks.
Re:Tariffs are wrong... (Score:3, Insightful)
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...
Re:Tariffs are wrong... (Score:3, Insightful)
Re:Tariffs are wrong... (Score:5, Insightful)
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.
Um.... US is one of the world's largest exporters. (Score:5, Insightful)
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.
$50 Billion/year is little?!?! (Score:5, Insightful)
Re:Tariffs are wrong... (Score:5, Insightful)
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.
Re:Tariffs are wrong... (Score:5, Insightful)
This is bad... (Score:5, Insightful)
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)
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
The *US* complains of Foreign Subsidies? (Score:5, Insightful)
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?
Took a while to arrive (Score:5, Informative)
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.
catfish-also-plan-to-sue dept. ??? (Score:3, Funny)
I doubt this will be popular... (Score:5, Insightful)
Just like Canadian Softwood. (Score:5, Insightful)
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.
Re:Just like Canadian Softwood. (Score:4, Insightful)
Do you have any opinions on the tarriffs the E.U. applied to Hynix?
Re:Just like Canadian Softwood. (Score:3, Informative)
Ironically, as a result, the forest companies had to ramp up production to get the costs down. This caused even more Canadian wood to flood into the US marketplace.
BTW, The WTO made their preliminary ruling a couple weeks ago. The US actions violated WTO treaties...
Re:Just like Canadian Softwood. (Score:5, Insightful)
If you are going to have free trade, do free trade.
--jeff++
Mostly good (Score:5, Informative)
Re:Mostly good (Score:3, Informative)
Corruption. (Score:5, Insightful)
Re:Corruption. (Score:3, Insightful)
So, if the South Korean tax payers gave us a hundred million dollars as a gift, you'd be angry, too? Because that's, effectively, what they are doing.
Sure, this gift may cause job losses at Micron, but that would be made up for b
Daisy, Daisy.... (Score:3, Funny)
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!
Correct me if i'm wrong ... (Score:3, Interesting)
Re:Correct me if i'm wrong ... (Score:3, Informative)
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
Hey, great... this worked so well the last time! (Score:5, Interesting)
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.
This is another example of freedom and democracy (Score:5, Informative)
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)
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.
The WTO will overturn it. . . (Score:3, Interesting)
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. . .
Gee where have I heard this before (Score:5, Interesting)
Korean chaebol and 'unfair' competition (Score:3, Interesting)
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....
It's our companies vs. a whole government (Score:4, Insightful)
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.
How to respond to a troll (Score:4, Insightful)
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)
- "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."
Vietnamese 'basa' IS a kind of Catfish... (Score:3, Interesting)
The last sentence doesn't make sense (Score:5, Funny)
Ummm
The Broken Window Fallacy (Score:5, Interesting)
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...
Re:The Broken Window Fallacy (Score:4, Informative)
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.
This will do exactly nothing... (Score:3, Interesting)
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.
background to the dispute (Score:5, Informative)
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.
I'm not a potato farmer (Score:5, Interesting)
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!!!
Good article - "Enslaved by free trade" (Score:5, Interesting)
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.
Re:Good article - "Enslaved by free trade" (Score:4, Insightful)
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!
FIXED LINKS (Score:5, Informative)
ft [ft.com]
eetuk [eetuk.com]
ZDNET [zdnet.co.uk]
e-insite [e-insite.net]
Re: FIXED LINKS (Score:3, Funny)
> PS: who else would love to shove their piece up into the Asian chick on the âoeInsight by WebTrendsâ AD that keeps popping up?
> I fucked up all the links, damnit
Browsers don't support that kind of 'gesture'.
Re:Extreme (Score:5, Funny)
Re:Extreme (Score:5, Interesting)
Just like we tax polluting fuels to encourage alternatives, this would have a very positive effect on "alternative" operating systems.
Re:North Korea? (Score:5, Interesting)
You *will* be screwed by this ruling, regardless of where you live. Prices for various electronics will be going up.
Re:North Korea? (Score:5, Informative)
Re:Hmmm Big Bad U.S Government (Score:3, Insightful)
Cursing America isn't always the answer.