Chip Industry Wants Trade Pact Extended
The controversial 1986 U.S.-Japan Semiconductor Trade Agreement has partially achieved its goal of opening the Japanese market to foreign-made chips, according to a study by the Semiconductor Industry Assn., but an extension of the pact is necessary because Japan has not fully complied with its terms.
In its fourth annual progress report on the trade agreement, the SIA said foreign chip producers--primarily American firms--had increased their share of the Japanese market to 13.3% by the second quarter of this year, from 8.5% in 1986. That still falls short of the 20% target for foreign producers established in a “side letter” to the trade deal.
In October, the SIA and a group of large computer companies called on the government to modify and extend the agreement when it expires next June. They called for an end to controversial provisions that fixed the price of memory chips at a high level, but said the United States must continue to press Japan so that foreign producers can obtain at least 20% of its market.
The trade deal came after Japanese firms were found to be dumping--selling below cost--several types of memory chips. The practice drove most U.S. producers out of those markets. The SIA noted Tuesday that U.S. companies had been able to maintain their position in some memory chip markets since the trade deal and have avoided being eliminated from others.
SIA officials said they were confident of support in Washington for an extension, although some Bush Administration officials have expressed opposition to the agreement.
In a letter to President Bush, the SIA called the agreement “an example of the U.S. government and industry working together.” But it also said that “because Japan did not begin its initiatives in earnest until almost three years into the agreement, it is highly unlikely Japan will meet the market access commitments it made in 1986 before the scheduled expiration of the agreement.”
In addition to market access, the SIA is asking that a new agreement provide that the Commerce Department investigate complaints of dumping. Under the current agreement, the U.S. government sets floor prices for the memory chips.
