[Congressional Record Volume 149, Number 33 (Monday, March 3, 2003)]
[Senate]
[Pages S2991-S2993]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]


          Massive Government Subsidies to Hynix Semiconductor

  Mr. CRAIG. Mr. President, I rise today to visit with my colleagues 
about something that is going on in Idaho and across this Nation at 
this moment that is critical to our economy, and especially critical to 
the economy of the State of Idaho. The situation that a company in 
Idaho finds itself in at this moment has resulted in its need to lay 
off 10 percent of its workforce because of actions taken by the Korean 
Government to prop up a bankrupt competitor of Micron.
  Micron is a company in Idaho that has been in place and is the 
world's second largest producer of memory chips. As a result of the 
Korean Government's propping up of the Hynix Semiconductor Corporation, 
the market now is tremendously softened and layoffs are occurring.
  In the mid-1980s, Micron almost went out of business because of 
dumping by Japanese companies. At that time, I acted in concert with 
the Bush Government. President Bush at that time worked with the 
Department of Commerce to put duties on that offset, but eventually 
that overrode that impact and it allowed that company, Micron, to 
become the second larger of the semiconductor companies in the world 
today.
  Micron, as I mentioned, is critical to the technological base of the 
United States. It employs 13,000 people--invaluable high-tech jobs in 
the U.S. and in other parts of the world. It produces D-RAM 
semiconductors, or random memory chips, a key component in countless 
electronic systems, from personal computers to satellites to military 
command and control systems.

  Most importantly, Micron is the only remaining producer of D-RAM 
chips in the United States. There used to be a half dozen of these 
companies a decade ago, but they all left the business in large part 
due to the unfair trade practices of other countries such as and 
including Korea.
  Now I believe I must do what I can to address this new situation that 
is costing U.S. jobs in the United States, is weakening our technology 
base, and is having a substantial impact on the State of Idaho.
  My bill, introduced last week, S. 492, reflects just how far, in my 
opinion, the Government of Korea has pushed with what I call illegal 
subsidies, and it reflects just how far I think we must go to respond 
to that situation.
  My bill would impose a duty on Hynix semiconductors as they come into 
the country. My bill ``suspends liquidation'' for these Korean 
semiconductors, which is another way of saying it watches them at the 
border. Then my bill requires a cash deposit of estimated 
countervailing duties in the 80-percent range. That is a serious step. 
Yet it is a legal and an appropriate step and, yes, it is actionable 
under the WTO, but it focuses us as a country on the problem we are 
facing with this kind of competition that I believe is illegal and is 
heavily Government supported.
  I am angry, and I say that straightforwardly, at the Government of 
Korea and their continued unrelenting campaign of illegal subsidies to 
Hynix in an attempt to bring our domestic producer not only to its 
knees, but to destroy it altogether and then dominate the semiconductor 
industry.
  Since October of 2000, the Korean Government, acting through the 
banks it owns and controls, has provided an incredible $16 billion--let 
me repeat that--the banks of Korea have provided an incredible $16 
billion in subsidies to Hynix, the Korean producer of D-RAM 
semiconductors. How much has our Federal Government subsidized Micron? 
Nada; not one bit.
  I think it is time we at least put up a barrier and test the 
international trade community to understand whether this is or is not 
an illegal action. We have that argument before the ITC at this moment. 
We hope there is a finding soon. But until then, I hope this Senate and 
the Finance Committee can come on point to recognize the critical 
environment that is being created by a company such as Hynix and a 
government backing them that strictly supports them for the purpose of 
dominating a world market and keeping its people employed.
  In the 1990s, Government-controlled banks in Korea lent heavily to 
Hynix at cheap rates, and Hynix built up massive capacity, over 90 
percent of which it exports. Ninety percent of what it produces in 
Korea leaves for the world market.
  The Government of Korea built up this company with one goal in mind: 
to create an export powerhouse. It succeeded, and Hynix became the No. 
3 producer of D-RAM chips in the world.
  When Hynix became unable to repay the debt coming due in 2001, the 
Government of Korea stepped in and essentially wiped out the debt by 
providing over $16 billion in debt forgiveness and debt restructuring 
over the past 2\1/2\ years. There is no rational economic justification 
for Government support for Hynix. Hynix has been unable to repay its 
debt, and it has lost $8 billion over the past 3 years. The subsidies 
it has received have permitted Hynix to stay in business and continue 
to run all its D-RAM plants at full capacity, flooding the market with 
subsidized product.

  They cannot make money. They have lost money, $8 billion over the 
last 3 years; and yet the Government still dumps money into them, and 
they are dumping money into them at a time when they are out building 
new capacity. The most recent Hynix bailout came 2 months ago when the 
Government provided $4.1 billion in debt relief and another $4.1 
billion in subsidy. Hynix only had $2.4 billion in sales last year. It 
just does not add up. Take a chalkboard out and outline that for the 
world to see, and the world will say that is a Government-controlled, 
Government-subsidized plant that is not even making a profit and, in 
fact, is losing large amounts of money.
  Hynix will use the debt forgiveness to continue to expand capacity. 
Just last week--this is almost like a slap in the face to the American 
workforce and to Micron and its companies--just last week Hynix 
announced it would begin work on new fabrication lines to produce D-
RAMs on state-of-the-art 300 mm wafers which will result in even more 
subsidized D-RAM from Hynix. They cannot make a profit, they are being 
subsidized heavily, and they are going to build more capacity. That 
does not make any sense at all, but then again putting a lot of people 
out of work in Idaho does not make any sense either when we are asking 
a company to compete against this producer at well below market prices.
  Now we read in the papers that Hynix and other Hyundai companies are 
being investigated for illegally transferring $500 million to North 
Korea in 2000. If that is true, that is a real slap in the face of 
Americans and the American worker. Of course, they did that for 
lucrative contracts. It did so with the help of South Korean banks and 
with the approval of the President of South Korea. I say that again. 
North Korea is being investigated for illegal actions with that 
country. This is the country that plans to reactivate its nuclear arms 
program and, we are now told, has just started one of its reactors. I 
hope the world will not tolerate this situation, and I hope our Senate 
will speak up to the issue.
  Korea is a developed country. It is one of the most developed 
economies in Asia. The Korean Government has absolutely no business 
keeping a company going when it would otherwise be bankrupt, and there 
is no question about it. Like I said, pull a chalkboard out, and run 
those figures. You have one conclusion: Unless your banker or your best 
friend--and in this instance, the bank is the best friend. The 
Government owns the bank and the bank owns the company and you bail 
them out for $16 billion. The purpose is obvious.
  The purpose of my legislation is to urge the Department of Commerce 
and other U.S. trade agencies to do everything in their power to fix 
this problem. That is what our trade laws are for. Do I like doing what 
I am doing? Absolutely not. Will I apologize for trying to protect an 
American company and a workforce against a heavily subsidized 
dominating company that wants to control the world marketplace with an 
undercost product? No, I will not apologize for that whatsoever.

[[Page S2993]]

  Is the action I take if the Senate were to pass my bill and were it 
to become law actionable at the WTO? Absolutely, and it ought to be to 
test whether what we have done is appropriate or whether, in fact, what 
Korea is doing at this moment is illegal, as I believe it is, and as I 
think the world marketplace would believe and the World Trade 
Organization.
  Once again, the ITC is reviewing this. We hope by late March that 
decision will be out there. The European Union is already reviewing 
Hynix. I am told they are finding them in violation. Why should 
American workers, Idaho workers, a great American company, one of the 
great American success stories, have to shut itself down and put itself 
in financial stress because it is being dumped on in a world market?
  Those are the problems we face. That is why I have introduced the 
legislation. My colleague, Senator Crapo, has introduced a resolution 
and has spoken to it. On the House side, Congressman Butch Otter speaks 
to it. Clearly, Idaho and Idaho's economy will take a tremendous hit 
because the Koreans are illegally playing the world trade game, heavily 
subsidized by their banks and by their government.
  I yield the floor.
  The PRESIDING OFFICER. Under the previous unanimous consent, the 
Senator from New Mexico is recognized for 5 minutes.
  The Senator from Utah.
  Mr. HATCH. Mr. President, I ask unanimous consent that I be given 1 
minute. I do have the approval of the distinguished Senator from New 
Mexico.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. HATCH. Mr. President, I compliment my colleague from Idaho. He 
has called it exactly the way it is. What is going on is a matter of 
unfair competition. It is a matter of improper governmental 
subsidization in competition with a company that is doing it all 
without government subsidization. I personally thank him for his good 
remarks; I agree with them and I would like to be associated with them.
  Mr. CRAIG. I thank my colleague.
  The PRESIDING OFFICER. The Senator from New Mexico.