[Congressional Record Volume 149, Number 32 (Thursday, February 27, 2003)]
[Senate]
[Pages S2979-S2981]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
SENATE CONCURRENT RESOLUTION 11--EXPRESSING THE SENSE OF CONGRESS
REGARDING THE REPUBLIC OF KOREA'S CONTINUING UNLAWFUL BAILOUTS OF HYNIX
SEMICONDUCTOR INC., AND CALLING ON THE REPUBLIC OF KOREA, THE SECRETARY
OF COMMERCE, THE UNITED STATES TRADE REPRESENTATIVE, AND THE PRESIDENT
TO TAKE ACTIONS TO END THE BAILOUTS
Mr. CRAPO (for himself and Mr. Allen) submitted the following
concurrent resolution; which was referred to the Committee on Finance:
S. Con. Res. 11
Whereas the government of the Republic of Korea has
continually, and in violation of its international trade
commitments, supplied financial aid to Hynix Semiconductor
Inc. (``Hynix''), a failing semiconductor company;
Whereas the United States has strongly and repeatedly
requested that the Republic of Korea refrain from these
wrongful trade activities;
Whereas these bailouts have resulted in severe distortion
of the world DRAM, semiconductor, and electronics markets to
the detriment of major United States and other non-Korean
producers;
Whereas the United States has continually provided
military, national security, and financial aid to the
Republic of Korea, including significant contributions to the
International Monetary Fund financial package to prevent the
Korean economy from going into bankruptcy;
Whereas Hynix exports the vast majority of its
semiconductor production to nations outside of Korea,
including to the United States and European nations;
Whereas, it was recently announced that Hynix would receive
an additional $4,000,000,000 in debt restructuring,
eliminating Hynix's existing debt, an additional
$1,550,000,000 in a debt-for-equity swap, and an extension of
$2,500,000,000 with respect to other outstanding Hynix loans;
Whereas Hynix's creditor banks are providing another
subsidy to Hynix in the form of $188,000,000 in financing to
a Chinese company to purchase Hynix's flat computer screen
business;
Whereas the largest creditors of Hynix are institutions
such as the Korea Development Bank and the Woori Bank, both
of which are 100 percent owned by the government of the
Republic of Korea; and
Whereas United States and Europe have been forced to
initiate anti-subsidy investigations against the Republic of
Korea: Now, therefore, be it
Resolved by the Senate (the House of Representatives
concurring), That--
(1) it is the sense of Congress that the actions of the
Republic of Korea with respect to the bailouts of Hynix
Semiconductor Inc. (``Hynix'') are severely detrimental to
the bilateral friendship and economic relationships between
the United States and Korea; and
(2) Congress calls on--
(A) the Republic of Korea to--
(i) immediately cease any further bailouts of Hynix; and
(ii) immediately comply with all of its obligations as a
member of the World Trade Organization, including its
obligations regarding subsidies;
(B) the Secretary of Commerce and the United States Trade
Representative to--
(i) immediately take such actions as are necessary to end
any further bailouts of Hynix, including the self-initiation
of further trade cases, the initiation of a further
government investigation of the financial impact of these
bailouts, and the calling of a special subsidies code meeting
to raise the legal concerns with this issue; and
(ii) begin consultations with Congress regarding
appropriate legislative action to fully deal with the impact
of the bailouts of Hynix; and
(C) the President to consult with the European Union
regarding joint action with respect to the unlawful subsidies
to Hynix that are harming the international DRAM,
semiconductor, and electronics markets.
Mr. CRAPO. Mr. President, I rise today to introduce this resolution
on behalf of myself and Senator George Allen from Virginia. This
resolution underscores a very serious and ongoing problem relating to
the illegal subsidies being provided by the Korean Government to Hynix
Semiconductor, one of the companies operating in South Korea. With this
resolution, my
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colleagues and I urge Secretary Evans, our Secretary of the Department
of Commerce, and Ambassador Zoellick, U.S. Trade Representative, to use
all means at their disposal to combat these illegal subsidies in the
strongest ways possible under our trade laws.
Since October 2000, the Government of Korea, acting through the banks
that it owns and controls, has provided an astounding $16 billion in
subsidies to Hynix, a Korean producer of DRAM semiconductors. Hynix is
a company with massive debt resulting from the easy lending practices
of the Korean banks during the late 1990s. With these preferential
loans, Hynix built substantial new capacity and became the third
largest DRAM producer in the world.
Starting in late 2000, Hynix's overdevelopment began to catch up with
them and Hynix became unable to repay the principal and interest on
these massive loans and bonds. Rather than letting Hynix undergo formal
bankruptcy and deal with the financial situation it faced, the Korean
Government orchestrated no less than five separate bailouts of Hynix.
Had it not done so, Hynix would have had to face a restructuring with
substantial asset sales, and would have been simply another competitor
in the marketplace in a more balanced and fair playing field.
However, these subsidies have permitted Hynix to stay in business
with its unrealistic business practices. Hynix, a company that cannot
compete in the market on a balanced playing field, in a fair market
environment, continues to run its inefficient DRAM plants at full
speed, flooding world markets with subsidized products. Despite the
subsidies, Hynix continues to lose money--$8 billion over the last 3
years. Yet the Korean Government continues to pour money into this
company.
Just 2 months ago there was yet another bailout, amounting to $4.1
billion. This is almost twice Hynix's revenues in all of the year 2002,
which amounted to $2.4 billion.
The Korean Government must not be allowed to continue to underwrite
the horrendous operating losses of this company as it has done for the
past 3 years. It is time for the Korean Government to stop its illegal
subsidies. In the highly competitive DRAM market, subsidies of this
sort completely distort production and trade.
Every other DRAM company in the world is being crippled by the
subsidized DRAM products that Hynix floods the markets with. This has
resulted in the worst and longest downturn in the DRAM sector that has
ever been experienced by this sector. Nobody can make money in this
business if one of the biggest players is being underwritten by the
South Korean government treasury. Subsidies of Hynix have had a huge
impact on Micron Technology, the last remaining U.S.-based producer of
DRAMs. Just last week, Micron announced it was laying off 10 percent of
its worldwide workforce. This translates into 1,100 lost jobs in Idaho
alone, and 560 lost jobs in the State of Virginia, which is why my
colleague, Senator Allen, is joining in this resolution.
This is the first time Micron has had to have layoffs since 1985, and
it was only done by the company as a last resort. Hynix subsidies have
had a real impact on Micron's bottom line as well. The subsidies have
impacted pricing to such an extent that even Micron, one of the most
efficient DRAM producers in the world, has lost $2 billion over the
past 2 years. We cannot afford to see an important technology like
DRAMs lost in the United States because of illegal, predatory foreign
government subsidies.
The South Korean government is clearly responsible for the bailouts
that have occurred. The creditor bank now owns 67 percent of Hynix, and
the government owns the vast majority of the creditor bank. To argue
that the government plays no role in this bailout is the height of
absurdity.
The Secretary of Commerce and the United States Trade Representative
have the power to remedy this situation and put a stop to more
bailouts. We need to use the trade laws we have to the fullest extent
possible and countervailing duty should be imposed that offsets the
full amount of these subsidies. These sorts of subsidies have
absolutely no place in today's global economy, particularly as we are
engaged in a round of new trade talks aimed at further liberalizing
trade regimes around the world. The injurious and anachronistic
policies of the government of South Korea must stop.
In this context, already the European Union and the United States
Government are engaged in investigations under our trade laws of the
predator conduct of the South Korean government in DRAM markets. We
expect decisions on these cases sometime in the next couple of months,
and hopefully these cases will establish the necessary groundwork for
us to be able to deal as we should in the global community with this
kind of unacceptable government subsidy.
The U.S. International Trade Commission has already issued its ruling
that Micron Technology has been injured by these illegal activities of
the South Korean government. We must now move on to determine the
extent of these activities and assure that countervailing duties are
identified and applied to the DRAMs that Hynix continues to flood the
world markets with.
I want to read a part of the resolution to establish what it is we
are asking our Congress to do.
After the whereas clauses, it states:
Resolved by the Senate and House of Representatives
concurring, That, No. 1, it is the sense of the Congress that
the actions of the Republic of Korea with respect to the
bailouts of Hynix Semiconductor, Inc. are severely
detrimental to the bilateral friendship and economic
relationships between the United States and Korea; and, No.
2, Congress calls on the Republic of Korea to immediately
cease any further bailouts of Hynix and to immediately comply
with all of its obligations as a member of the World Trade
Organization, including its obligations regarding
subsidies. The Secretary of Commerce and the U.S. Trade
Representative are called on to immediately take such
actions as are necessary to end any further bailouts of
Hynix, including the self-initiation of further trade
cases, the initiation of a further government
investigation of the financial impact of these bailouts,
and the calling of a special subsidies code meeting to
raise legal concerns with this issue and to begin
consultations with Congress regarding appropriate
legislative action to fully deal with the impact of
bailout of Hynix; and, the President is called on to
consult with the European Union regarding joint action
with respect to the unlawful subsidies to Hynix that are
harming the international DRAM semiconductor and
electronics markets.
As I have indicated, we face incredibly difficult times in the DRAM
and semiconductor industry as a result of one nation's desire to
continually prop up its competitors against all other world
competitors--a competitor that has shown it cannot effectively compete
without continuous government subsidies.
This is one of the core reasons why we are engaged worldwide in
negotiations to reduce government subsidies to inefficient competitors,
to stop nations from trying to flood the market with their company's
products so that they can drive other, more efficient and more
effective competitors out of the market and take those markets from
other countries where they properly reside.
I encourage all of my colleagues to strongly support this resolution
and send a strong message to the government of South Korea that the
bailouts of Hynix must stop.
Mr. CRAPO. Mr. President, I was present as the debate took place with
regard to the editorial issues that have been raised relating to the
Miguel Estrada nomination. The Senator from Nevada raised this issue.
In the debate over the Estrada nomination, there are many issues that
flow back and forth. One of them is the question of what the public
believes, and what the editorial boards across this Nation believe.
The editorial from the New York Times was discussed earlier. I point
out that this editorial in the New York Times was one of only a few
editorials in the country that supports the position that the Senate
should continue with a filibuster of this nomination. In fact, only
eight of the editorial boards across this Nation have taken the
position of supporting the filibuster of Miguel Estrada's nomination,
while fully 51 editorial boards across the Nation support ending the
obstruction of this nomination and conclusion of the filibuster and
resulting in an up-or-down vote in the Senate on the Estrada
nomination, including the Los Angeles Review Journal which on two
separate occasions supported Mr. Estrada.
Thank you, Mr. President. I yield the floor.
[[Page S2981]]
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