Daewoo Electronics Denies Receiving Unfair Subsidies, Disputes U.S. Ruling

May 31, 2012
U.S. Commerce Department has proposed countervailing duties of up to 71% on the South Korean manufacturer's washing machines.

South Korea's Daewoo Electronics took issue Thursday with a U.S. Commerce Department decision to slap initial retaliatory duties on its washing machines, saying it did not receive unfair subsidies.

After a preliminary probe prompted by a complaint from U.S. home appliance maker Whirlpool (IW 500/59), the department said three South Korean makers of large residential clothes washers unfairly benefited from state subsidies.

It said it plans to impose countervailing duties of up to 70.58% on Daewoo's washers. Tariff rates on Samsung Electronics (IW 1000/12) washers were set at 1.20% while LG Electronics (IW 1000/74) would be subject to a duty of 0.22%.

Failure to Participate Costs Big

Since Daewoo declined to take part in the U.S. investigation, its higher rate is based on the "adverse facts available," the Commerce Department said Wednesday.

It estimated the total value of the imports of washers from South Korea totalled $568.5 million last year.

Daewoo is considering ways to address its views to U.S. authorities, its spokesman said, stressing the firm did not receive unfair government subsidies.

"We also have less than a 1% stake in the U.S. washer market, meaning our presence and impact in the market are not big enough to receive such major punitive measures," he told AFP.

Market Presence is 'Insignificant'

The firm -- a former unit of the now-defunct Daewoo Group -- did not respond to the U.S. probe as its sales and presence in the U.S. market were "too insignificant" compared to bigger rivals like Samsung or LG, he said.

Once the Commerce Department makes a final decision, the duties can only go into effect if the U.S. International Trade Commission rules that the imports threaten to cause material injury to U.S. producers.

"For now, it's only a preliminary ruling by the Commerce Department and it may take a while until we hear a final conclusion," a Seoul trade ministry official told AFP.

Samsung said in a statement it was confident that a full investigation, once concluded, would confirm it had fully complied with U.S. trade laws.

LG Electronics said it was "gratified" with the preliminary ruling, and it respected international trade rules.

-- Dow Jones Newswires contributed to this report --

Copyright Agence France-Presse, 2012

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