U.S., Japan may be nearing 'breakthrough' in chip talks

Electronic News, July 1, 1996 by Andrew MacLellan

Lyons, France--Meeting here at the G-7 summit, President Clinton and Japanese Prime Minister Ryutaro Hashimoto appear to have moved closer to brokering a compromise between the company's respective chip industries before the U.S.-Japan Semiconductor Trade Agreement expires July 31.

Renewal of the accord, which was established in 1986 to ensure open trade for foreign companies doing business in the Japanese chip market, has created increasing tension between the U.S.-based Semiconductor Industry Association (SIA) and the Electronic Industries Association of Japan (EIAJ), who remain divided in their objectives.

Although nothing tangible emerged from Mr. Clinton's meeting last week with the Japanese prime minister, the tete-a-tete renewed hopes that an equitable settlement might be in the offing. The SIA, which is pushing to renew the treaty, said the half-hour parley "produced a significant breakthrough." The EIAJ was somewhat less optimistic.

"I don't think we can tell based on the very limited discussion that appears to have taken place if there is any more momentum than before for a settlement," said EIAJ counsel Tom Steindler. "From what I've heard, they talked and agreed to reach an agreement by July 31 but discussed nothing substantive."

Following recently released 1Q96 figures showing foreign share at 30.6 percent of the Japanese semiconductor market (EN, June 24), the EIAJ again called for an end to the trade agreement and its provision for continued government oversight of the industry.

Last week via teleconference, the EIAJ and SIA re-opened talks to air their proposals, but still appear to be some distance from striking a settlement.

"We held a conference (last) Monday, and the two sides have exchanged critiques of the positions articulated," said Mr. Steindler. "The EIAJ has put their proposal on the table in the hopes the SIA will show some flexibility toward it. But I think everyone was waiting to see what would happen at this summit meeting before we decided the next step to take."

The SIA, which insists government involvement is essential to maintaining an open market in Japan, last month rejected a proposal by the EIAJ which called for an industry-led, multilateral council to monitor world semiconductor trade.

However, in a seeming concession to the group's hard-line stance, SIA president Tom Armstrong said last week, "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."

Mr. Steindler said the SIA's apparent compromise was superficial and related only to the number of times the groups would meet each year. He added that government trade representatives from the two countries are expected to continue talks later in July, although it is not known if Mr. Clinton will remain personally involved.