[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

[[Page S2980]]

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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