Sanctions on Japan Goods to Be Urged : U.S. Proposal Cites Trade Violations in Semiconductor Sector
Top Reagan Administration trade officials will recommend that sanctions be imposed on Japanese goods, including consumer electronic products such as VCRs, in retaliation for repeated violations of a trade agreement on semiconductors, according to sources close to the ongoing trade dispute.
The sanctions will be considered by the Cabinet’s Economic Policy Council, at a meeting scheduled for next Thursday, before a final recommendation is made to President Reagan.
Industry observers believe that consideration of sanctions would reflect the growing U.S. dissatisfaction with trade relations with Japan, and thus would be as much a political as an economic measure. In recent weeks, the trade dispute has become more acrimonious, especially concerning high technology sectors such as telecommunications and super computers.
Past Reluctance Cited
In the past, Reagan has been reluctant to use sanctions, but officials of the U.S. trade group representing manufacturers of chips expressed confidence that in this case they will be imposed.
Such an action, which could include penalty duties on such electronic products as VCRs and computer printers, would be highly unusual, coming as it would while the trade agreement with Japan is still in force. Although import duties normally are passed on to consumers in the form of higher prices, the proposals seek to have the sanctions applied so that manufacturers would instead be forced to trim their profit margins.
Industry officials said they continue to recommend the sanctions, notwithstanding recent and highly visible actions by Japanese trade officials to enforce the agreement.
The pact, reached last July 31, suspended an unfair trading practices complaint and two anti-dumping cases. It called for Japanese semiconductor makers to stop dumping--that is, selling below fair-market value--chips in the United States, end dumping in so-called third countries (other than the United States and Japan) and provide U.S. chip makers better access to Japanese markets.
Last January, Michael B. Smith, deputy U.S. trade representative, warned Japanese trade officials that the United States expected to see evidence of compliance with the provision against third-country dumping by Feb. 28 and increased access for U.S. semiconductors by March 31.
The Commerce Department earlier this week completed a report reviewing the dumping situation in other countries, but it would not disclose its findings. Industry officials, who have been contributing to the department’s fact-finding process, say their information shows that no progress has been made in either area.
Practice ‘Has Continued’
“Everything we supplied them showed that (third-country) dumping has continued and that market access has not improved,” Sheila Sandow, spokeswoman for the Semiconductor Industry Assn., said.
Although the SIA has been advocating sanctions since last November, Sandow said the trade group believes that any action taken should be punitive but also have as its goals greater compliance with the trade agreement.
To that extent, she said, the industry is pleased to see any actions that Japan’s Ministry of International Trade and Industry takes to encourage compliance, including a meeting Friday in Tokyo, in which Hajime Tamura of MITI again urged the country’s chip makers and users to comply with the agreement. But, Sandow said: “We were wondering why he didn’t do that last July, when the agreement was reached, instead of now, almost a month after the deadline.”
Tamura, in the first acknowledgement by a Japanese official that third-country dumping has continued since the pact was signed, chastised one company, Oki Electric, for selling semiconductors in Hong Kong “at cheap prices.”
Firm Singled Out
Without identifying Oki by name, Tamura took the unusual step of admitting the accuracy of the charges against Oki and singling out the firm for undermining the ministry’s attempt to comply with the U.S.-Japan semiconductor agreement.
“The ministry has been carrying out strict monitoring of prices in approving export licenses,” he said, “and as a result we have informed the world that no Japanese semiconductor maker is engaging in dumping. Now, however, it has been learned that one company sold its product at cheap prices. This act will create a harmful influence.”
Tamura made the statement in the presence of Oki Electric’s president, Namio Hashimoto, and executives from Fujitsu, Hitachi, Mitsubishi Electric, Matsushita, NEC, Sanyo, Sharp, Sony and Toshiba.
“We expect you to make sure this doesn’t happen again,” he told the executives.
MITI has ordered all Japanese chip makers to charge no less than $2 for chips exported to third-country markets, and Tamura told the companies, which together account for more than 40% of Japan’s total chip consumption, that they were not buying enough foreign-made computer chips.
The revelation that Oki was selling chips at below fair-market prices came this week after repeated claims by MITI that Japan was in compliance with the agreement.
Micron Technology, a Boise, Ida., maker of computer chips, released an invoice showing underpricing by Oki. The disclosure, government officials believe, lent support to a Senate resolution calling for retaliation against violators of the agreement.
‘Case Is Clear-Cut’
Although Administration officials said the “case is clear-cut” that the Japanese have been violating the agreement--”or else it wouldn’t be going to the Cabinet for action”--they insisted that it is not their aim to suspend or terminate the agreement.
Setting aside the accord most likely would lead to imposition of dumping duties on Japanese-made semiconductors sold in the United States, as well as trade sanctions. Though the Senate’s non-binding resolution, passed 93 to 0 on Thursday, called for swift retaliation to penalize violations, it also noted that the action should “serve as an incentive for compliance” with the agreement.
Donna K. H. Walters reported from Los Angeles and Sam Jameson from Tokyo.
