Dispute Over Semiconductors Could Escalate Into Trade War : House Seeks U.S. Sanctions Against Japan
On the eve of a White House meeting to consider sanctions against the Japanese for failure to implement a bilateral semiconductor trade agreement, the House on Wednesday added its voice to those calling for retaliatory measures.
By unanimous vote, the House approved a non-binding resolution, similar to one passed last week by the Senate, urging actions that would “remedy and prevent further violation” of last year’s trade accord and compensate the United States for past violations.
The measure, sponsored by Rep. Robert T. Matsui (D-Calif.), is expected to buttress the case of U.S. trade officials who support the sanctions. The Cabinet’s Economic Policy Council is expected today to recommend to President Reagan that he impose duties against Japanese electronic goods--an action that observers say could move the worsening relations with Japan onto the level of a trade war.
The House vote was part of a flurry of congressional activity Wednesday over the volatile trade situation: A toughened-up trade bill made substantial gains in the House, and Commerce Secretary Malcolm Baldrige told a Senate committee hearing that the United States “cannot stand by idly” while Japan attempts to dominate the world electronics market.
Meanwhile, there has been intense lobbying this week on the sanctions issue by the Japanese trade ministry--which has been trying to avert them--and by the U.S. semiconductor industry--which is urging that they be imposed. The Japanese have hinted at countermeasures of their own if sanctions are imposed, and industry observers warn that sanctions could cause the ministry to lose its already tentative influence over Japanese chip makers’ adherence to the accord.
But Matsui said Congress is turning a deaf ear to Japan’s promises of production cutbacks and other measures. Congress, he said, would “be very angry” if Reagan didn’t take “swift, decisive action” against the Japanese on the semiconductor trade issue.
The House Ways and Means Committee, though approving a major portion of the trade bill Wednesday, left an opening for additional protectionist measures, as it put off until next week’s consideration by the full House a decision on how to deal with countries such as Japan that have huge trade surpluses with the United States but deny U.S. products similar access to their markets.
The semiconductor trade pact, reached last July and signed by the two countries last September, suspended two dumping cases and one unfair trade practices complaint involving semiconductors, the tiny electronic devices used in computers, autos and a wealth of consumer electronic products.
In exchange, the Japanese companies agreed to stop dumping chips and allow U.S. firms greater access to Japanese markets, increasing their share to 20% by the end of the five-year accord.
Despite what appears to have been a vigorous effort by the Japanese trade ministry to enforce provisions of the agreement, U.S. chip makers say that Japanese chips are still being dumped in high-consumption markets such as Hong Kong and Singapore and that their share of the Japanese chip market has actually dropped, to 8.4% from 11.2%, since the agreement was signed.
Wednesday’s House resolution mirrored the Senate’s in calling for actions to be directed at companies that have continued to violate the agreement and not for duties to be applied to chips themselves.
Sanctions in the form of tariffs or penalty duties should be applied to consumer electronic goods, U.S. electronics industry executives have urged, but in such a way that U.S. consumers won’t have to pay higher prices.
For instance, duties might be slapped on one offending company’s videocassette recorders but on another company’s laser printers, and so on. That way, U.S. consumers wouldn’t face resulting price hikes on all Japanese-made VCRs, or laser printers, on the market.
