Color TVs at Issue : U.S. Tariff Target May Be Phantom

It was a curious thing when President Reagan decided on Monday to lift $51 million in punitive tariffs on Japanese imports of 20-inch color television sets.

Among all the varied responses to the announcement, there was not one sigh of relief.

Not one Japanese maker of televisions stepped forward to say it was glad because it could resume shipments of color TVs to the United States without facing the 100% tariff--a tariff that, after all, would have doubled the import cost, and therefore retail price, of the sets.

Sanctions Didn’t Hurt

In fact, not one major Japanese maker of color TV sets said it had been hurt by the projected $51 million in tariffs, part of a $300-million package of sanctions imposed by Reagan six weeks ago. Not the five companies identified by the Reagan Administration as the ones affected by the tariffs--Matsushita, NEC, Toshiba, Hitachi and Mitsubishi. Ditto Sharp, Sony and Sanyo.

It seems, indeed, that even without the tariffs, Japanese companies weren’t shipping very many 20-inch color TVs here this year--certainly not the $51 million worth on which the sanctions were based. Imposing the tariffs didn’t change that, and lifting them, experts in the industry say, won’t either.

The targets of the tariffs, imported 20-inch television sets, may in fact be phantoms--ghosts of the days before the yen rose in value against the dollar and Japanese makers could afford to send a few sets made in Japan to the U.S. market.

‘Big Publicity Stunt’

“This is just a big fat publicity stunt, typical of the Reagan Administration,” said David Lachenbruch, editorial director of Television Digest, a publication considered the bible of the TV industry.

Reagan had explained his move carefully, saying it was “strictly proportional” to progress the Japanese had made in enforcing last year’s trade agreement on semiconductors. After all, it had been Japan’s apparent failure to live up to the agreement that prompted the trade sanctions.

So a complex formula was used to calculate exactly how much of the tariffs should be lifted as a reward for the progress made, and as an incentive for future compliance. The government looked at improved prices for a specific computer chip, called a 256K D-RAM, that Japanese makers had been “dumping,” or selling at below fair market value, in Southeast Asia markets. According to their calculations, a 17% reduction in the tariffs was warranted.

In this case, the U.S. government may have got something and given nothing in return.

According to the Commerce Dept., the 17%--or $51 million in tariffs--happens to match the amount of 20-inch color TVs imported from Japan last year. (The idea of the 100% tariffs was that Japanese companies would ship at least the same amount of televisions here this year, and that if the sanctions were in effect for a year, it would cost them $51 million, either because they would pay the tariffs, or stop shipping the sets and lose sales.)

Fraction of the Market

Even though the $51 million was only a fraction of the total $8 billion-$10 billion U.S. television market last year, this was viewed by the government as an especially delicious category to have on the tariff list. The five companies that would suffer, the government said, were among the biggest violators of the chip agreement. They all make chips--and were found guilty of dumping them in the United States. Plus, they all use chips in their products, and so could help enforce the second part of the agreement, which specifies that Japan would increase purchases of chips made by U.S. companies.

But Matsushita, NEC, Toshiba, Hitachi and Mitsubishi all say they don’t export finished 20-inch color TV sets from Japan to the United States. Not last year, not this year.

Each has at least one plant in the United States where it makes or assembles the sets. Some also have plants in places like Mexico, Canada and Malaysia, from which they ship televisions to the U.S. market. Those are not covered by the tariffs.

So which companies were shipping $51 million of sets into the United States last year? Well, Sony--not a chip maker and not a target of the sanctions--said that last year, it shipped $4 million of advanced 20-inch color sets from Japan to this country.

‘Not Cost-Effective’

“We had been toying with the idea of resuming shipments of our (20-inch color) KV20XVR model, bringing it back to the States. But we ultimately decided it would not be cost-effective,” said Robert Dillon, chief financial officer for Sony of America. “That was because of the strong yen. And we decided that long before the sanctions were imposed.”

Sanyo, another Japanese maker of televisions, said it did not contribute to the 149,000 models of 20-inch color TVs that the government said entered the United States from Japan last year.

“We just don’t import TVs from Japan to the United States anymore,” said Charles Green, executive vice president of Sanyo Manufacturing Corp., from Arkansas, where the company has been building color televisions since 1977.

And though sources said Sharp was the major exporter of 20-inch color sets from Japan last year, Sharp officials said that was not the case.

Doesn’t Add Up

“We sell 1 million (19- and 20-inch) sets in the United States each year, and 88% of those are made at our Memphis plant,” said Daniel J. Infanti, corporate marketing manager for Sharp Electronics Corp. of Mahwah, N.J. “The rest of them are made in Malaysia.”

A few other Japanese companies, such as Fujitsu and tiny Funai, sell televisions in the United States, but industry experts say their share of the market is so small that it is doubtful their shipments could have made up the difference between the $4 million Sony said it imported and the $51-million total.

In fact, when each company was asked who had been shipping 20-inch color televisions last year, none could provide a firm answer. “Gee, you got me there,” said one of the executives, succinctly echoing the responses.

But this may be splitting hairs. Or, as one U.S. trade official said on Tuesday, “Take our word for it. There was $51 million worth of imports of 20-inch sets last year.”

Shipments Dwindled

Anyway, the theory was to stop the flow of television sets this year. Customs officials in Los Angeles, after a spot check of their agents, agreed that shipments of 20-inch sets had dwindled dramatically since the sanctions were imposed, though they said figures are not yet available.

The flow, however, already had been reduced to a trickle in 1987.

In the first three months of the year, U.S. Customs logged only 8,633 units of the 20-inch color TVs coming from Japan. That equates to an estimated import value of less than $3 million. If that pace had kept up all year, even adding some for a busy holiday season, perhaps $15 million worth of 20-inch sets would have entered the country from Japan.

But what is interesting about the three-month statistics, Television Digest’s Lachenbruch said, is that by March the imports had nearly ceased. In that month, by which time sanctions had been threatened but not yet imposed against color televisions, only 111 models of 20-inch sets entered U.S. Customs warehouses from Japan.

Effect of High Yen

“This year,” Lachenbruch said, “Japan effectively ceased to be a supplier. It had nothing to do with the sanctions, though. It was because of the high yen.”

So, if the tariffs weren’t keeping out any sets, and the lifting of the tariffs won’t open the floodgates to new shipments, what’s it all about?

The Japanese TV makers had a word for it: symbolism.

“I really think,” said one executive who requested that his name not be used, “that this was a slap on the wrist. But it didn’t hurt us, or anyone else. It just looked good.”

Industry analyst James I. Magid agrees. “This was immaterial to the TV industry. It didn’t involve enough sets to matter. The symbolic gesture of imposing the sanctions was meaningless; and (easing the sanctions) is an equally symbolic move in the other direction.”