Japan Will Stop Dumping Cheap Chips on U.S. Market : Could Add $2 Billion in U.S. Sales

Japan agreed “at the 11th hour and 59th minute” before a U.S. deadline to stop selling computer chips at below-market prices in the United States and to allow American chip makers a larger share of the Japanese market, the Reagan Administration said today.

The pact could mean $2 billion a year in sales to American semiconductor producers, U.S. Trade Representative Clayton Yeutter told a White House briefing.

In exchange for the concessions, the United States will drop a series of cases accusing Japan of “dumping” its semiconductors in this country, cases that could have led to hefty penalties on Japanese imports.

The Administration had said it would impose those duties if an agreement was not reached by midnight.

President Reagan said in a statement that the agreement “shows that vigorous enforcement of existing laws can open markets. To succumb to the temptation of protectionism will benefit no one.”

Lobbying Efforts

The announcement of the new trade pact came as Reagan and his aides stepped up their lobbying efforts to sustain the President’s veto of legislation to impose import restraints on textiles.

Under the chips agreement, the U.S. government will monitor the prices of Japanese computer memory chips, which are shipped into this country in large volumes.

Japanese trade officials will be primarily responsible for monitoring prices on other semiconductor products shipped in lesser amounts, although U.S. officials will generally keep tabs on these as well.

“The U.S. government will monitor every shipment of Japanese semiconductors. If there is any dumping, we will reinstitute the cases,” Commerce Secretary Malcolm Baldrige said.

The pact covers all semiconductor trade with Japan for the next five years, including any new generations of so-called “super” memory chips manufactured by Japanese companies, Baldrige said.

No Guaranteed Share

Under the agreement, U.S. manufacturers were not guaranteed a specific share of the lucrative Japanese market, as the U.S. industry had sought. Instead, Japan agreed to set up an organization to help increase sales of foreign computer parts in Japan.

Baldrige conceded that this area of the agreement was not nailed down as well as the anti-dumping sections, but he said he believes that the Japanese will observe it anyway.

“The Japanese understand now, they really do,” Baldrige said. “The consensus is growing that they really can’t go around exporting more without importing more,” he said.

U.S. semiconductor makers had sought an agreement that would have boosted their share from the current 8% to a range of 15% to 20%. Japanese-made chips in certain categories command well over half the U.S. market.

Semiconductors or memory chips are used in products ranging from computers and telecommunications equipment to cars and household appliances. Although the United States pioneered the transistor field, Japan has taken the lead in the world market with its generally lower prices.