Japan, U.S. Consider Revising Microchip Pact

Japanese and U.S. officials are holding talks in Washington on whether revisions of a 1986 U.S.-Japan agreement on microchip trade are needed, a Japanese official said Friday.

Japan is seeking bilateral talks with American and European Community (EC) negotiators because of a ruling by the GATT trade body that found a U.S.-Japanese accord on microchips broke free-trade rules, a Japanese diplomat said.

The report by a three-member dispute settlement panel, set up last April to air a complaint by the European Community, said Tokyo’s agreement to maintain high prices for its exports of microchips violated GATT rules.

The panel report, obtained by Reuters in Geneva on Friday, called on the GATT ruling council to recommend that Japan bring its measures covering export sales of semiconductors to countries other than the United States into conformity.

The report concluded: “An administrative structure had been created by the government of Japan which operated to exert maximum possible pressure on the private sector to cease exporting at prices below company-specific costs.”

But the panel said there was not enough evidence to support an EC contention that the 1986 bilateral accord had granted special privileges for U.S. microchip exports to Japan.

The panel reported that it “could not detect any evidence of preferences accorded to United States products. Import statistics supplied by Japan showed that the growth of sales of semiconductors in Japan from sources other than the United States had been higher than that of the sales originating in the United States.”

A senior Japanese trade diplomat in Geneva said: “We need to talk with the Americans and Europeans on this. We are getting in touch with both of them on the basis of the report. But these are not negotiations.”

Asked if Japan might try to block adoption of the report, which requires unanimous approval, the Japanese diplomat replied: “I don’t know. We cannot prejudice our decision.”

The ruling council of the 96-nation General Agreement on Tariffs and Trade is to consider the panel report at its next monthly meeting, set for May 4.

An official of Japan’s Ministry of International Trade and Industry said the meetings in Washington were discussions of whether or how to revise the agreement.