Japan, S. Korea May Settle Trade Dispute

South Korea withdrew an earlier complaint with the WTO after Japan began examining whether to lift a punitive tariff on computer chips produced by Hynix Semiconductor.

GENEVA, March 6 (Kyodo) -- South Korea has withdrawn an earlier complaint it filed with the World Trade Organization seeking the elimination of a punitive tariff imposed by Japan on computer chips produced by Hynix Semiconductor Inc. of South Korea, sources close to the matter said Friday.

The withdrawal of the complaint came after Japan commenced examining whether to lift the punitive tariff, paving the way for a possible settlement through talks between the two countries, they said.

The WTO's arbitration panel effectively ruled in favor of South Korea in November 2007 and urged Japan to lift the barrier. Following the recommendation, Japan cut its 27.2 percent countervailing duty on imports of Hynix dynamic random access memory chips, or DRAMs, to 9.1 percent.

Dissatisfied with the move, South Korea filed the complaint in September, calling for the duty to be scrapped. The WTO has set up a compliance panel to assess whether Tokyo has acted on the body's earlier decision.

The bilateral trade dispute was sparked when Japan imposed the countervailing duty in January 2006 after calling into question whether financial support for the chipmaker provided by a South Korean bank in 2001 and 2002 constituted government subsidies.

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