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GENEVA (Kyodo) The World Trade Organization appears ready to partially accept Seoul’s complaint that Japan has no justification for imposing punitive duties on imports of computer chips from South Korea, diplomatic sources said Tuesday.

A WTO panel established to solve the bilateral trade dispute has informally notified the countries of its tentative report that rejected part of Japan’s claim, the sources said. The panel is to hand down its conclusion in May.

The two parties may appeal the decision to a higher panel, the sources said.

Minister of Economy, Trade and Industry Akira Amari, who did not confirm the development, said at a news conference in Tokyo that the government is fighting the dispute, “believing that Japan’s claim is perfectly right.”

“It is a natural action and completely correct handling to impose countervailing duties against export subsidies in line with WTO (rules),” he said.

The dispute was sparked after Japan in January 2006 levied a 27.2 percent punitive duty on dynamic random access memory microchips, known as DRAMs, made by Hynix Semiconductor Inc. of South Korea.

The two countries failed to reach a resolution through talks and South Korea referred the case to the WTO two months later.

Japan has said the South Korean government breached WTO rules by giving Hynix export subsidies and enabling it to set the prices of its DRAM chips unfairly low in the Japanese market, thereby causing damage to Japanese manufacturers.

South Korea has argued the money in question was not subsidies but a loan to Hynix from a government-financed bank.

It was the first time Japan has imposed punitive duties on foreign products.

The United States and the European Union slapped import duties on Hynix-made DRAMs in 2003, claiming they were unfairly subsidized.

South Korea later filed a complaint with a WTO panel for dispute settlement and won.

In the U.S.-South Korean case, however, a higher panel finalized a decision in June 2005 that overruled the lower panel decision and supported the U.S. claim.

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