A US government department has told Daewoo to pay a 71 percent import duty on machines made in South Korea, after Daewoo failed to respond to a probe of government subsidies.
The US Commerce Department (USCD) announced a preliminary finding after a complaint was filed by Whirlpool that Seoul-based Daewoo, LG and Samsung Electronics all from South Korea, sell washing machines in the USA for less than production costs.
This comes after Daewoo in March said it was ‘on track” to diversify distribution channels by supplying Wal-Mart. as it targeted doubling its home appliance sales to $150 million this year in the United States.
By comparison Samsung was ordered to pay only 1.2% duty, and LG a mere 0.22% on the washing machines imported to the USA, according to the USCD.
Interestingly it has been said that alll other companies would pay 1.2% so this duty may also apply to washing machines and other large kitchen applainces from Europe and China as well.
Gwon Dae Hoon, a spokesman for the company, said Daewoo will discuss the matter with its U.S. unit and decide how to respond before the final finding is announced.
The higher duty set for Daewoo reflects the company’s refusal to respond to an investigation of South Korean subsidies for the manufacturers. These Korean companies are said to sell about $569 million (£354 million) worth of washing machines a year in the USA according to the USCD.
“I don’t think it’s going to be a big issue for Samsung and LG as the duties don’t seem to be high, and the portion of North America washing machine sales out of their total sales is small,” Kang Yoon Hum, a Seoul-based analyst told Bloomberg.
Samsung is “confident that once the full investigation is concluded, the U.S. Department of Commerce will confirm that Samsung is in compliance,” Samsung told Bloomberg by e-mail. “Samsung respects the trade rules in the U.S. market.”
LG will fully cooperate until the final decision is made, the company said today in an e-mailed response to a Bloomberg News.
Whirlpool is pleased “given the proven record that South Korean appliance producers have benefitted from their government’s subsidies that violate trade law,” said Kristine Vernier for Whirlpool.