Semiconductor Manufacturers Agree to Agree on Trade Pact Renewal

TOKYO — Anxious to defuse a potentially bitter bilateral spat, Japan’s semiconductor manufacturers have done an about-face in recent days and agreed to discuss renewal, in some form, of the controversial U.S.-Japan semiconductor agreement that expires in July.

Last week, Norio Ohga, chairman of the Electronics Industries Assn. of Japan, said his group was willing to consider a three-year transitional agreement based on private-sector cooperation rather than government intervention. Within days, a Japanese government spokesman also said his government was willing to make a “slight commitment” to resolve the chip dispute.

Until now, Japan has steadfastly refused to discuss renewal of the much-reviled agreement, arguing that it was managed trade. Under the agreement, originally signed in 1986, Japan committed to opening up its semiconductor market to foreign firms--with a target of 20% market share for the foreign firms--and to quit dumping chips abroad.

But, in an ironic twist, the same global forces that the Japanese used as fodder for opposing renewal--expansion of the foreign share of the Japanese market to 26% and the sharp increase in foreign alliances--have driven them back to the negotiating table.

Japanese semiconductor suppliers and users now can’t risk a political spat that would alienate the U.S. partners critical to their survival.

“Right now, Japanese semiconductor users have good relations with semiconductor companies in the United States and fear some [difficulty] might come to the business relationship between users and suppliers,” said Tamotsu Harada, an industry spokesman.

Roger Mathus, a Tokyo-based official with the U.S. Semiconductor Assn., said an agreement is far from certain given Japan’s resistance to government involvement. The SIA, which insists on government monitoring of the market, is evaluating Japan’s offer.

The Japanese also proposed establishing a multilateral conference on semiconductors.

Mathus said he hopes private-sector and government officials can have parallel meetings in June to discuss the proposal, although personal problems have cropped up that could cause further delays.

Ohga, who is chairman of Sony, was admitted to the hospital Tuesday, where he was found to be suffering from severe fatigue. And Pat Weber, chief of the U.S. semiconductor industry group, was unexpectedly asked to take the reins of Texas Instruments last week after Chief Executive Jerry Junkins died of a heart attack.

With leaders in the United States, and possibly Japan, facing voters later this year, there is political pressure to defuse the issue. It is one of three contentious trade matters still on the table--the other two being film and insurance.

These factors lead many industry observers to believe that an agreement between U.S. and Japanese industry leaders, with some kind of government seal of approval, is likely.

“It’ll be a typical diplomatic compromise,” said Chuck Goto, an electronics analyst with Smith Barney International Inc. in Tokyo, adding that the agreement “just doesn’t have that much significance in actual trade. In many ways, the pact is irrelevant.”