Japan-U.S. Semiconductor Accord Near

Japan and the United States have agreed on most issues in tough trade talks aimed at renewing a semiconductor pact that expires in July, a senior foreign ministry official said Friday.

Japan, reluctant to renew the five-year pact on managing trade in microchips, the tiny memory devices that are at the heart of computers and other electronic equipment, said agreement is near after a meeting in Tokyo last week.

“We have already agreed upon market share and dumping on our respective markets but (still need to clear up) dumping on third markets,” Foreign Ministry spokesman Taizo Watanabe said.

Dumping is the practice of selling product at below cost, undercutting competition.

Watanabe declined to give other details, but analysts said Washington eased its demands for a 20% fixed share of the Japanese market for U.S. chip makers. It agreed instead to make it a target figure, as requested by Japan.

The analysts added that it is likely that Japan gave in on its demand that Washington drop $165 million in trade sanctions slapped on Japanese electronics because of Tokyo’s alleged failure to improve access to its market for foreign chip makers.

Watanabe said it was up to the United States to decide whether it would drop the sanctions, indicating that it was no longer a Japanese demand.

“That’s something they would decide. It’s not for us to comment,” he said.

In the original pact in 1986, Japan agreed not to dump microchips on foreign markets and to improve market access for U.S. chip makers in its domestic market.

Washington slapped $300 million worth of sanctions on some Japanese electronic goods in 1987 after maintaining that Japan had not honored its access pledge or stopped third-country dumping.

It reduced the sanctions to $165 million worth after judging that Tokyo had stopped dumping in countries outside the United States.

The U.S. semiconductor industry had lobbied hard for a fixed 20% market share.

In a letter accompanying the 1986 pact, both sides acknowledged a U.S. target of 20% of Japan’s chip market. The United States has maintained that represented a pledge, while Japan said it was just a commitment.

A U.S. government official in Tokyo said that while most of the main issues had been cleared up, negotiations would continue to nail down details.

“We’re optimistic we’ll have a (final) agreement soon. . . . There doesn’t seem to any major issues, but the devil’s in the details,” he said.