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US-Japan reach accord on chip trade

U.S. and Japan have at the very last minute struck a deal over international semiconductor trade.

Negotiating for more than 30 hours after talks were supposed to end, the United States and Japan have reached an agreement on semiconductor trade, but representatives of the two sides still can't seem to agree on what to call it or how binding it will be.

The settlement -- the Japanese side calls it an "understanding," the American side an "agreement" -- was announced this morning, although the original ten-year-old bilateral semiconductor agreement had actually expired on Wednesday night. Both sides made concessions that only a few days ago seemed impossible.

The settlement calls for the formation of two worldwide organizations, one for governments and one for trade associations, devoted to the multilateral discussion of semiconductor trade. The American side had lobbied against any kind of global forum. The industry forum, called the World Semiconductor Council, will be open to trade organizations from countries that have eliminated or promised to eliminate all semiconductor tariffs.

For their part, the Japanese negotiators agreed to the U.S. demand that both governments continue to monitor industry data on market size, market growth, and import/export levels. Each industry association will voluntarily gather data from its member companies and present a quarterly report to the U.S. and Japanese governments.

This process is not binding, however, according to Stanton Anderson, counsel to the Electronic Industries Association of Japan, the Japanese trade organization that negotiated the industry-level agreements with their U.S. counterpart, the Semiconductor Industry Association.

"I wouldn't describe it as monitoring," Anderson said earlier today. "There are no requirements for data collection by governments whatsoever."

Conversely, the Office of the U.S. Trade Representative released a statement that highlighted the continued government involvement in the trade process: "The new agreement retains a role for government in reviewing a wide range of qualitative and quantitative data, including market share."

Regardless of interpretation, the settlement won't have the same weight as the previous agreement, under which foreign share in the Japanese semiconductor market rose from 8 percent in 1985 to over 30 percent this year.

Anderson said there will be no formal or legal signing of a document meaning that there will be no legal obligation attached to the agreement. A U.S Trade Representative spokesperson could not confirm that the settlement had actually resulted in a signed document.

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