Bloomberg News

Daewoo Told to Pay 71% U.S. Duty on Washing Machines

May 31, 2012

Workers assemble washing machines at an LG Electronics washing machine factory in Changwon, South Korea. Photographer: Zack Seckler/Bloomberg News

Workers assemble washing machines at an LG Electronics washing machine factory in Changwon, South Korea. Photographer: Zack Seckler/Bloomberg News

The U.S. Commerce Department told Daewoo Electronics Corp. to pay a 71 percent import duty on large, residential washing machines made in South Korea, after the company didn’t respond to a probe of government subsidies.

The agency announced a preliminary finding yesterday after Whirlpool Corp. (WHR:US) of Benton Harbor, Michigan, said in a Dec. 30 complaint that Seoul-based Daewoo, LG Electronics Inc. (066570) and Samsung Electronics Co. (005930) of Suwon, South Korea, sell washers in the U.S. for less than production costs.

The finding comes after Daewoo in March said it was ‘on track” to diversify distribution channels by supplying Wal-Mart Stores Inc. as it targeted doubling North America home appliance sales to $150 million this year. Samsung was ordered to pay a 1.2 percent duty, and LG Electronics 0.22 percent on the washing machines imported to the U.S. from South Korea, according to the agency. All other companies would pay 1.2 percent.

Daewoo will discuss the matter with its U.S. unit and decide how to respond before the final finding is announced, Gwon Dae Hoon, a spokesman for the company, said today by phone.

The higher duty set for Daewoo reflects the company’s refusal to respond to an investigation of South Korean subsidies for the makers, which sell about $569 million worth of the machines a year in the U.S., the agency said.

“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 at NH Investment & Securities Co., said by phone today.

Whirlpool ‘Pleased’

Samsung is “confident that once the full investigation is concluded, the U.S. Department of Commerce will confirm that Samsung is in compliance,” the company said today 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 query.

Samsung fell 2.6 percent to 1.194 million won in Seoul trading at 12:47 p.m. local time, while LG Electronics dropped 3.6 percent. The benchmark Kospi index retreated 1.4 percent. Daewoo was delisted from the Korean stock exchange in 2002.

Whirlpool is pleased “given the proven record that South Korean appliance producers have benefitted from their government’s subsidies that violate trade law,” Kristine Vernier, a spokeswoman, said in a statement.

Whirlpool closed up 30 cents to $63.13 in New York Stock Exchange trading (WHR:US), and touched $65.45 after the announcement.

Countervailing Duties

The agency’s decision sets countervailing duties, which are imposed to offset government subsidies. The Commerce Department hasn’t issued results of its investigation into Whirlpool’s anti-dumping complaint against imports from Korea and Mexico. That decision is scheduled next month, according to a statement.

The Commerce Department and the U.S. International Trade Commission, an independent agency, are scheduled to make their final determinations on the trade disputes later this year.

To contact the reporters on this story: Brian Wingfield in Washington at bwingfield3@bloomberg.net; William McQuillen in Washington at bmcquillen@bloomberg.net

To contact the editor responsible for this story: Jon Morgan at jmorgan97@bloomberg.net


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Companies Mentioned

  • WHR
    (Whirlpool Corp)
    • $151.86 USD
    • -0.02
    • -0.01%
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