International Trade:

Observations on the U.S.-Japan Semiconductor Arrangement

NSIAD-87-134BR: Published: Apr 15, 1987. Publicly Released: Apr 15, 1987.

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In response to a congressional request, GAO assessed the results of the U.S.-Japan negotiations on semiconductor trade, focusing on: (1) what was negotiated; (2) the expected outcome; (3) the administration's views of the results; (4) U.S. industrial views of the results; and (5) the impact of the agreement on U.S. semiconductor manufacturers and users.

GAO found that the goals of the agreement were to: (1) enhance free trade in semiconductors on the basis of market principles and the competitiveness of the industries in the United States and Japan; (2) resolve the unfair trade practice of dumping Japanese-manufactured semiconductors in the United States and international markets; and (3) eliminate the presence of unfair trade barriers, which limit the ability of U.S. semiconductor producers to sell in the Japanese market. GAO noted that: (1) the administration concluded that Japan had not complied with the agreement, since third-country dumping persisted and the Japanese semiconductor market was still unfairly restricted; and (2) administratively planned sanctions reflected U.S. resolve to ensure compliance with the agreement and should strengthen its credibility. GAO also found that the U.S. semiconductor industry: (1) supported the use of sanctions if they were placed on Japanese companies that priced their products below allocated costs and did not disadvantage U.S. users; (2) viewed the government's role as establishing and maintaining the rules of fair trade; and (3) advocated changes in tax incentives and export control laws to further stimulate industry competitiveness.

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