GENEVA, July 13: The World Trade Organisation on Friday ruled that Japan’s punitive tariffs on imports of semiconductors made by South Korean firm Hynix were illegal. In a ruling released on the WTO’s website, a dispute settlement panel set up by the organisation upheld a complaint launched by South Korea in March 2006.

It said Japan had “improperly imposed countervailing duties” and called on Tokyo to bring its measures into line with world trade rules.

In January 2006, Japan imposed tariffs of 27.2pc on dynamic random access memory chips produced by Hynix over the following five years, accusing the company of selling them in Japan at below cost.

South Korea insisted the decision breached world trade rules and was based on allegations only from Japanese firms.

The WTO panel rejected South Korea's request for an immediate refund of the extra duties, saying that it was up to Japan to determine the “modalities of the implementation” of the ruling.

The United States and European Union also imposed duties on Hynix products in 2004 after claiming that the company’s bailout was arranged with the help of government controlled banks and so constituted payment of subsidies.—AFP