Reagan Reportedly Set to Lift Sanctions Against Japan Electronic Goods

Times Staff Writer

The Reagan Administration is close to lifting an additional $84 million of sanctions the President imposed against Japanese electronics goods last March, trade officials said Friday.

Although there is still disagreement among Cabinet officials, the action likely will take place within the next two weeks, the trade officials said, as a gesture to Japanese Prime Minister Yasuhiro Nakasone, who is stepping down at the end of this month.

In March, President Reagan slapped the sanctions on $300 million of Japanese imports. The move, which was the harshest action by the United States against Japan since World War II, came in retaliation for Japan’s failure to comply with a 1986 trade agreement on semiconductors, or computer chips.


That agreement, which set aside two dumping complaints and an unfair trade practices case against Japanese chip companies, called on Japan to end dumping, or selling at below fair market value, chips in the United States and in so-called third-country markets (places other than the United States or Japan). It also required Japan to allow U.S. chip makers greater access to Japan’s market.

Of the $300 million in sanctions, $135 million represented damage done to the U.S. semiconductor industry through Japan’s failure to end third-country dumping. The remaining $165 million was an estimate of sales U.S. companies lost because the agreement’s guidelines on increased market access had not been followed.

At the Vienna economic summit in June, Reagan lifted 17%, or $51 million, of the sanctions, citing Japan’s progress in ending third-country dumping. That left $84 million of the sanctions.

U.S. Commerce Under Secretary Bruce Smart and Makoto Kuroda, vice minister of Japan’s Ministry of International Trade and Industry, met Friday to discuss progress on the agreement.

“We had productive discussions on the U.S.-Japan semiconductor agreement, in regards to third-country dumping,” Smart said in a prepared statement. He added: “I am also pleased with our positive discussions on the adequacy of supply of semiconductors from Japanese firms.”

Discussions between the two countries will continue on Monday, and will include concerns that the United States has about production quotas and export license controls imposed on Japanese chip-making firms.


While the Commerce Department has been eager to lift the $84 million of sanctions, other Administration officials have insisted that concerns over chip supplies be resolved first. The Japanese government imposed production quotas on chip makers, including U.S. firms that have plants there, and has issued export licenses on an allocation basis.

That, said the officials, has resulted in some severe shortages of particular kinds of chips here, such as memory chips widely used by computer makers. Trade officials are seeking guarantees from the Japanese that there “will be no restrictions on the ability of Japanese companies to export fairly priced semiconductors,” one official said.

Administration officials said that while the dumping situation has improved, there has been little progress made on supporting greater sales by U.S. companies in Japan. The U.S. semiconductor industry, which in the past three months has begun to recover from a two-year slump, garners less than 10% of all chip sales in Japan; in the rest of the world, its market share is at least 20%.