South Korea said yesterday it had called for arbitration by the WTO after failing to settle a trade dispute with Japan over punitive tariffs on semiconductor exports.
The request was filed with the WTO in Geneva on Thursday after the two countries were unable to reach a compromise on the tariffs slapped by Japan on computer memory chips made by Hynix Semiconductor.
"We have sent documents asking for the establishment of an arbitration panel to settle the dispute," according to an official of the Ministry of Foreign Affairs and Trade.
South Korea will formally make its request at an an extraordinary session on May 30 of the WTO Dispute Settlement Body and repeat it at a full session of the DSB on June 19.
Under WTO arbitration rules, this move will compel the DSB to appoint a three-member arbitration panel, the ministry said.
The request came after South Korea and Japan failed to settle the dispute during a 60-day bilateral consultation period.
In January, Japan imposed tariffs of 27.2 percent on dynamic random access memory (DRAM)chips produced by Hynix over the next five years, accusing Hynix of selling them in Japan at below cost.
South Korea insisted the decision was unfair as it was based on unilateral allegations by Japanese companies.
An official of the Japanese trade ministry dismissed South Korea's allegation, saying Japan sticks to WTO rules.
"Japan fully complies with the WTO rules. We don't understand what part of our conduct the South Korean government thinks is breaching the rules," a Japanese trade ministry official said.
"We can't say anything until the WTO panel makes a conclusion on it," the official said.
In similar cases of DRAM trade disputes with the EU and the US, South Korea also requested WTO panels.
With the EU, the WTO panel last year recognized part of the South Korean claim.
However, with the US, the WTO adopted its Appellate Body report saying "there remain no findings of WTO inconsistency with respect to" the US countermeasures.
Heavily indebted Hynix was rescued in December 2002 by a 3.25 trillion won (US$3.3 billion) bailout by bank creditors.
The US and EU imposed duties of 44.7 percent and 34.8 percent, respectively, on Hynix products in 2004 after claiming the bailout was arranged with the help of government-controlled banks and so constituted payment of subsidies.
South Korean creditors deny the government played any role in arranging the rescue package. The lenders insisted it was a commercially based decision involving several independent foreign banks.
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