EU Scraps Tariff on Hynix DRAM

The European Union scrapped its countervailing tariff on Hynix Semiconductor’s dynamic random access memory (DRAM) chips.

The EU decided to lift its 32.9 percent tariff on Hynix DRAM chips at the European Conference of Ministers of Transport, in Luxembourg, Monday. The tariff will be lifted retroactively from December 31, 2007.

That means Korea’s Hynix was allowed to export its products to the EU without a countervailing duty from the first day of this year.

Hynix predicts that this decision will raise its EU market share from the current 12 percent as of late March to 16 percent, the market share it held before the countervailing duty was implemented. If it successfully raises its market share to 16 percent, the company’s annual sales should reach 200 million dollars (or 194 billion won).

The EU initially introduced the countervailing duty on Hynix chips because the company received government subsidies. However, the EU decided to scrap the tariff since the subsidies did not give any further benefits to the chipmaker as of the end of last year.

U.S. chipmaker Micron Technology and German chipmaker Qimonda argued that sales of BOE Hydis, an LCD manufacturer which was spun off from Hynix, and the government’s tax concession could also be considered as subsidies. However, the EU decided that the two cases did not justify a countervailing duty.

Moreover, the EU will return 2 million dollars, some of which was countervailing duty paid by Hynix since July 2005.

Hynix hopes the EU’s decision will encourage the United States and Japan to scrap their own countervailing duties on Hynix sooner than expected.

The U.S. Department of Commerce already decided to lower its current 31.86 percent tariff to 23.78 percent on Hynix products via its annual meeting in March. The Commerce Department and the International Trade Commission will hold a meeting to decide whether to completely scrap countervailing tariffs on Hynix.

Japan, which levied a 27.2 percent duty on Hynix chips, was told by the World Trade Organization that its countervailing duty on Hynix was inconsistent with the WTO Agreement on Subsidy and Countervailing Measures in December 2007.

nex@donga.com