The US and South Korea are "highly unlikely" to reach an agreement that would prevent tariffs from being imposed on the products of two South Korean computer-chip makers, a top US official said yesterday.
Trade ties have been strained since the US Department of Commerce's preliminary finding in April that South Korean chip makers Hynix Semiconductor and Samsung Electronics Co received unfair government subsidies. US and South Korean officials met in Paris earlier this month seeking to settle the dispute, but the talks ended without a deal.
US Secretary of Commerce Donald Evans said Washington remains open to the possibility of further talks before the Commerce Department decides on June 16 whether the companies should be subject to punitive duties.
But he wasn't optimistic the two sides would settle their differences.
"I think it's highly unlikely" a settlement will be reached, he said.
Evans was in Seoul to attend an international conference on combating corruption. He met with South Korean officials to discuss the semiconductor row, and to urge officials to loosen rules in the local automobile and pharmaceutical sectors and bolster intellectual property rights laws.
Last year, Infineon Technologies of Germany and Micron Technology of the US filed complaints to the EU and the US Department of Commerce, saying South Korean rivals received subsidies allowing them to undercut global chip prices.
The Commerce Department's preliminary ruling found subsidy rates for dynamic random access memory, or DRAM, chips ranging from 0.16 percent to 57.37 percent.
Evans said both sides would be allowed to provide further evidence before the final decision is made.
If the ruling stands, the US International Trade Commission will decide by late next month whether Hynix will pay a US duty of nearly 58 percent. A smaller 0.16 percent tariff would be imposed on Samsung.
South Korea has protested the move as unfair, saying such duties would significantly hurt domestic companies' exports.
South Korean Commerce, Industry and Energy Minister Yoon Jin-shik has said he might ask the WTO, which sets the rules of international trade, to arbitrate if the US penalizes the two companies.
Trade between the two nations is valued at nearly US$60 billion a year. The US is South Korea's top trading partner, and South Korea is the US' sixth-largest.
Samsung and Hynix are two of the world's largest computer memory chip makers, and DRAM chips are South Korea's biggest export item.
South Korea exported US$5.97 billion worth of DRAM chips last year. Shipments to the US accounted for 32.5 percent of the total at US$1.94 billion.
In a preliminary ruling earlier this year, the EU Commission said it is considering imposing a 33 percent tax on Hynix memory chips. It is expected to finalize its decision Aug. 24.
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