U.S. Chip Makers Call for Action Against Japanese : Trade: They claim that they haven’t expanded on their 10% market share, while Japan says a 1986 accord didn’t guarantee a 20% stake by 1991.
The Bush Administration is facing new demands from domestic microchip producers that it crack down on Japan for alleged violations of the semiconductor trade accord signed by the two countries in 1986.
U.S. chip makers have asked the White House either to stiffen the trade sanctions that the United States imposed against Japan in 1987--and later eased--or to launch new unfair trade practices proceedings against Japanese producers as early as next month.
The U.S. industry’s trade group, the Semiconductor Industry Assn., contends that Japan has failed to live up to a pledge in the 1986 accord that it guarantee U.S. manufacturers 20% of the Japanese chip market by 1991.
American manufacturers now have slightly less than 10% of the Japanese market, about the same level as when the trade accord was signed.
However, Japanese officials counter that neither the accord itself nor a controversial “side letter” that accompanied it ever formally pledged a 20% share.
They charge that U.S. companies simply are not making the specific types of chips needed by Japanese electronics manufacturers, the major users of the chips.
The issue is fast becoming a major controversy for the Bush Administration, which is aware of the economic importance and political clout of high-technology industries yet is ideologically opposed to arrangements that seek to allocate shares of any market among competitors.
U.S. Trade Representative Carla A. Hills initially angered American producers by saying she never would have negotiated the kind of agreement that the two countries worked out in 1986.
Hills said she believes that U.S. chip producers would be able to garner more than 20% of the Japanese market if the market there were truly open.
At the same time, however, the Administration is reluctant to risk provoking a backlash in Japan over an accord that both governments now regard as unrealistic.
The White House is prodding Japan to take broad economic steps that would open more of its markets than just semiconductors, and it has stepped up pressure on Tokyo significantly.
President Bush included the complaints of the U.S. semiconductor industry on the list of U.S.-Japanese trade disputes that he discussed with Japanese Prime Minister Toshiki Kaifu during their summit meeting at Palm Springs on March 2 and 3.
The Electronics Industry Assn. of Japan is expected to file a formal protest today asking Hills to deny the U.S. industry’s petition, contending that Japan is complying with the 1986 accord, has increased its purchases of foreign-made chips and is not blocking imports.
The Japanese trade group contends that the main reason American companies have not benefited from the trend is that they have not produced the kinds of chips that Japanese electronics manufacturers need the most.
U.S. companies are able to supply chips used by only half the Japanese market, the organization maintains.
“The Japanese side cannot force U.S. companies to produce devices for this market, but neither should the Japanese be blamed for (the) failure of U.S. companies to do so,” the organization stated in a 24-page report to be made public today.
The U.S. semiconductor industry sought similar action by the Administration a year ago, but the White House denied its petition then, arguing that no new action was needed.
There is considerable disagreement about the terms of the 1986 accord. Although U.S. officials insist that they received verbal promises from Tokyo that the American producers eventually would get a 20% share of the Japanese chip market, the accompanying letter in which the language is contained cites the number only as a goal.
Meanwhile, all sides agree that Japanese producers have lived up to two other provisions in the accord: that they stop predatory pricing in the United States and that they trade fairly in third-country markets around the world.
The United States has retaliated once for alleged Japanese violations of the 1986 pact. In March, 1987, the White House imposed 100% tariffs on some $300 million in imports of Japanese electronics products and appliances.
Those sanctions were reduced a few months later, after Japan complied with the provisions prohibiting predatory pricing. Only a handful of sanctions remain.
The Administration is nearing deadlines on a series of decisions about whether to launch unfair trade practices proceedings under a provision of the 1988 Omnibus Trade and Competitiveness Act. The law requires the White House to take action in cases in which foreigners refuse to reduce their trade barriers.
In addition, several bills are pending on Capitol Hill to require Bush to retaliate in the semiconductor case. Lawmakers say lobbying by both sides has been intense, both in Congress and in the departments and agencies that deal with trade issues.
