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To: Ram Seetharaman who wrote (4337)	12/8/1998 11:37:00 PM
From: DJBEINO	Respond to of 9582

WTO Backs U.S. in South Korea Chip-Dumping Dispute Bloomberg News December 8, 1998, 7:53 p.m. PT Washington, Dec. 8 (Bloomberg) -- The World Trade Organization rejected a challenge from South Korea and ruled the U.S. may continue to collect antidumping penalties against chipmakers Hyundai Electronics Co. and LG Semiconductor Co., U.S. trade officials said. The U.S. Trade Representative's Office said the preliminary ruling by a dispute-arbitration panel at the Geneva-based WTO concluded that the duties, first levied about five years ago to retaliate against what the U.S. considers unfairly priced imports, adhere to international law. The penalties apply to dynamic random-access memory chips, or DRAMs, the most common chips found in personal computers and other electronic devices. The WTO decision signals that the U.S. ''sets a constructive standard for fair competition in the international marketplace,'' Commerce Secretary William Daley said in a statement. The ruling comes at a time when DRAM prices in the U.S. have been tumbling because of excess production capacity and the devaluation of Asian currencies, including the Korean won. Prices for 16-megabit DRAMs range between $1.80 and $2, while prices for 64-megabit DRAMs range between $8.50 and $10.50 -- a decline of about 95 percent during the last two-and-a-half years. The global glut in DRAMs came after manufacturers rushed to build plants in 1994 and 1995, when prices were higher. South Korea's top three DRAM makers -- including Samsung Electronics Co., the world's largest -- account for more than 30 percent of global production. LG Semicon exports about 10 percent of its chips to the U.S., while Hyundai exports about 40 percent to the U.S. 'Technical Matter' The WTO panel endorsed all aspects of the U.S. anti-dumping investigation, which was based on charges initially brought by Micron Technology Inc., except one. That exception pertained to conditions under which the Commerce Department can revoke an antidumping order, like the one against South Korean DRAMs. Under current law, the department requires the foreign companies to prove that they aren't likely to dump again. The Korean government said the burden of proof should fall on the U.S. to prove that dumping is probable, said a lawyer familiar with the proceedings. The panel agreed with the Koreans on that point, saying it was unfair for the U.S. to force foreign countries to prove they aren't going violate a law, the lawyer said. U.S. officials downplayed the importance of the exception. ''This point of the panel report appears to be a technical matter that can be easily addressed without undermining in any way the findings on DRAMs or the effectiveness of antidumping measures,'' U.S. Trade Representative Charlene Barshefsky said in a statement. Micron officials said the WTO report vindicates the U.S. approach. Dumping ''is an illegal trade practice and we are pleased that the Department of Commerce has pursued this matter and we believe this is the right outcome,'' said Micron spokeswoman Julie Nash. The Korean companies appealed the investigation to the WTO last January, arguing that it violated WTO rules. Spokesmen for LG Semiconductor American and Hyundai Electronics America in San Jose, California, failed to return calls for comment. In its most recent review of the antidumping order, the U.S. imposed penalties on LG Semicon and Hyundai Electronics involving more than $400 million in exports in 1996 and 1997 for the alleged ''dumping'' -- the practice of selling below fair value to gain market share. Samsung Electronics, Korea's largest producer, isn't affected by the charges. Samsung adjusted its U.S. export practices to satisfy the terms of a 1992 anti-dumping decision. Global Market Share Hyundai controls about 8 percent of the $120 billion global semiconductor market, LG Semicon about 4 percent and Samsung about 14 percent. Micron controlled about 10 percent prior to its acquisition of Intel's DRAM facilities, while Intel controlled about 7 percent, according to a report from de Dios & Assoc. The U.S. is the world's largest semiconductor market. Many investors are betting that Micron will start making money again soon. Shares of the Boise, Idaho, company have risen more than 50 percent in the last three months. They closed up 1 5/8 at 52 7/8. In a related case, the ITC said yesterday it found evidence that cheap DRAMs from Taiwan are harming the U.S. industry enough to warrant consideration of punitive duties to discourage ''dumping'' in the U.S. market. The preliminary ruling also involves a complaint filed by Micron.