craig@unicus.UUCP (Craig D. Hubley) (03/28/88)
The following is the complete text of an article in the Toronto Financial Post,
originally from the Financial Times of London.
This is the best damn news I've seen in a while. Get `em GATT!
However, *please* at least read the last paragraph of this article.
It is important if you want to see this economic equivalent of the
Nazi-Soviet non-aggression pact squashed for good.
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U.S. - Japan chip pact illegal, says GATT panel
===============================================
GENEVA - The U.S. is seeking emergency trade talks with Japan following
a ruling by the General Agreement on Tariffs and Trade (GATT) that their
bilateral pact on semiconductor business was illegal.
According to the findings of a special GATT disputes panel, released by
the European Commission in Brussels yesterday, Japan and the U.S. violated
GATT rules in agreeing bilaterally to maintain high microchip prices on
third markets as well as in the U.S.
The GATT ruling comes as a severe embarrassment to both nations. The two
concluded their controversial semiconductor pact in 1986 after a protracted
and bitter trade row. To comply with the ruling, which is due to be
discussed by the full GATT council May 4, several terms of the trade pact
may have to be modified, according to U.S. trade experts.
In particular, Japan's price monitoring scheme for semiconductors may have
to be changed or eliminated. The system was designed, according to U.S.
officials, to minize price differentials between different geographic
markets.
In the U.S., prices for Japanese-made memory chips are controlled by the
Commerce Department, which determines a cost-based price for each Japanese
supplier.
Without some form of control over Japanese export prices to Europe and
elsewhere, the U.S. feared it would become a high price island for memory
chips, forcing American computer and electronics firms off-shore in search
of cheaper chips.
Willy De Clercq, the EC external trade commissioner, said: ``We expect the
GATT council to adopt the panel's conclusions on May 4, and we hope that
Japan will rapidly and completely end this system of price-fixing.''
European views on semiconductor prices vary as sharply as between producers.
Brussels has launched anti-dumping investigations on two specific types of
Japanese microchips and users have complained that many of their microchip
imports have become too costly in the past two years.
U.S. officials argue that Japanese price monitoring has stopped local chip
makers dumping in Europe and that without the system, European chip makers
would become vulnerable to cheap Japanese exports.
Such arguments, are, however, largely academic under current market conditions.
A severe worldwide shortage of memory chips has driven up prices in both the
U.S. and Europe. Many computer and electronics firms would welcome Japanese
semiconductors at almost any price.
The panel did not find enough evidence to support one European complaint that
the U.S.-Japan semiconductor deal granted U.S. exporters special priveleges
in Japan.
According to trade diplomats in Geneva, the U.S. is pressing Japan not to
abandon the semiconductor deal. It has suggested that by abandoning one or
two of its elements the Japanese could change their monitoring from the
coherent system the GATT panel found objectionable.
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Note that last paragraph! I would suggest that this is a good time for
Americans to write their congresscritters and whatever other organs are
subject to public pressure. Emphasize how this rotten deal has burned
the much larger computer manufacturing and perhipheral and software and VAR
industries, to keep a few (one? == Micron) chip makers in business.
Perhaps someone knowledgeable about such political matters could post some
advice about how to turn up the heat.
Craig Hubley, Unicus Corporation, Toronto, Ont.
craig@Unicus.COM (Internet)
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