Japan gets tougher in chip talks

As the expiration date of the U.S.-Japan semiconductor trade agreement approaches, the Tokyo government has stepped out from the shadows to pursue a more aggressive role in negotiations. And it's not necessarily pushing in the direction favored by the U.S. government and chip industry.

The agreement, which has boosted foreign companies' share of the Japanese market from 9 percent in 1986 to more than 30 percent today, expires on July 31. The United States wants the agreement to be renewed, claiming that American companies are still disadvantaged in the Japanese domestic market, while the Japanese claim their domestic semiconductor market is already fully open and free-market forces should be allowed to take over.

Japan's Ministry of International Trade and Industry reiterated today a proposal it first floated on June 20 that sharply criticizes the U.S. position as "inconsistent with accepted principles of free trade, reciprocity and open markets" and a violation of World Trade Organization rules.

The statement comes only four days after Prime Minister Ryutaro Hashimoto met with President Clinton for a brief private discussion at the Group of Seven economic summit. Hashimoto gave the American side some hope with a pledge that his government would take responsibility in negotiations, a change from the earlier official position that negotiations should be conducted by trade organizations, principally the Electronic Industries Association of Japan and its American counterpart, the Semiconductor Industry Association.

The American were hoping that the government would be more amenable to American proposals than the Japanese association and after the private meeting, Japanese officials hinted their country might be willing to make concessions, according to the Asahi News Service. But today's repetition of the multilateral proposal seems to indicate that the Japanese government is unwilling to bend to the U.S. position.

The Japanese ministry proposes replacing the outgoing bilateral agreement with an international multilateral forum represented by Japan, the United States, and the European Union that would consider policy issues but stay clear of market targets and managed trade.

Trade representatives from the two governments are scheduled to meet July 15-16 at an Asia-Pacific Economic Cooperation forum in New Zealand. Renegotiation of the semiconductor agreement promises to be a key political issue, as President Clinton struggles to keep the support of the California high-tech industry, a significant factor in his 1992 election.

The SIA for one is still hoping to keep both governments out of the process. "SIA wants these relationships to continue," association president Tom Armstrong said in a statement hailing Hashimoto's pledge. "We are seeking a new agreement which will continue to promote cooperation between the U.S. and Japanese industries in a transition plan that maintains government involvement at a reduced level."

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