WTO to review Japan compliance to memory chip ruling

GENEVA (Reuters) - The World Trade Organization (WTO) set up a panel on Tuesday to examine whether Japan has complied with an earlier verdict ordering it to scrap duties on South Korean memory chips.

The WTO's Appellate Body ruled in November last year that Japan must remove its 27.2 percent countervailing duties on imports of South Korean dynamic random access memory chips.

After the two countries failed to agree on a timetable for Tokyo to implement that ruling, a WTO arbitrator in May set a September 1 deadline for the policies to be adjusted.

But South Korea told the WTO's Dispute Settlement Body (DSB) that Japan had only reduced its duties to 9.1 percent -- not enough, in Seoul's view.

"Despite its earlier promise to comply with the DSB's ruling, Japan has instead engaged in delaying tactics in order to maintain an illegal countervailing duty on imports from Korea for as long as possible in contravention of the DSB's ruling," South Korea said in a statement to the WTO.

Japan said on Tuesday that it had implemented the WTO ruling and was ready to defend itself before a compliance panel.

The case originated in the 2002 bail-out of Hynix Semiconductor Inc (000660.KS), the world's second largest memory chip maker. Japan, whose Elpida Memory Inc (6665.T), competes with Hynix, imposed the duties because it said the bail-out amounted to a state subsidy.

(Reporting by Jonathan Lynn)