`It's about time,' say Congress and business on chips

By , Staff writer of The Christian Science Monitor

Japan wants an ``emergency consultation'' with the United States to try to cool off a high-tech dispute that has boiled over. Last Friday the White House announced it will slap 100 percent tariffs on $300 million in Japanese electronic goods containing semiconductors, the silicon wafers that make computers work.

Yoshiji Nogami, a Japanese Embassy official, says Japan intends to send a letter to the White House requesting such a meeting prior to the arrival of Prime Minister Yasuhiro Nakasone in Washington at the end of April. Japan also held out the possibility it would protest the tariffs to the General Agreement on Tariffs and Trade in Geneva, or unilaterally end the agreement.

(Separately, Japanese newspapers reported over the weekend that Japan plans to buy several multimillion-dollar American supercomputers. Like semiconductors, the supercomputer issue has become a focal point for US dissatisfaction.)

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The ``chip war'' is the result of the breakdown of an agreement reached last July between Japan and the United States. The Japanese at that time agreed to stop dumping chips in the US and in third countries, such as Taiwan and Korea, and also agreed to allow greater entree of US-made chips into Japan. The Commerce Department has decided that the Japanese failed to live up to parts of the agreement. The Japanese deny they have broken the agreement.

The bubbling trade dispute spilled over to the currency markets last week when the dollar fell to 147.15 yen, its lowest level in 35 years. Many traders attributed the fall to the trade tensions.

Unless the US decides to meet with the Japanese, the next step in the dispute is a public hearing on April 13, when the US will chose $300 million in Japanese electronic imports on which to levy the 100 percent tariff. On Friday, the White House released a list of $1.8 billion in Japanese electronic goods to be considered for the tariffs. The list includes disk drives for computers, small color televisions, black and white televisions, radio-tape players, small electronic motors, window air conditioners, refrigerators, and photographic film used in X-rays. The new tariffs will go into effect on April 17.

Congress, which is working on a trade bill, is applauding the White House actions. Rep. Edward F. Feighan (D) of Ohio says, ``The prompt response is appropriate and hopefully will be effective.'' But Rep. Richard A. Gephardt (D) of Missouri believes the White House should learn a lesson from the affair. Congressman Gephardt, a presidential candidate, says, ``The refusal of the Japanese to keep their word underscores the basic fallacy in depending on the `untender mercies' of our foreign competitors for enforcement of trade agreements.''

US business generally reacted by supporting the action. Jack Biddle, president of the Computer and Communications Industry Association in Washington, called the action ``beneficial if it gets the attention of the Japanese government and people that the time has come to have some serious bilateral discussions to level the playing field.''

But some businessmen were wary. Gale Aguilar, vice-president for business development and strategy for Prime Computer in Natick, Mass., says the action could hurt some computer manufacturers if the Japanese decided to retaliate by withholding computer chips the US does not make. ``If we lose a $1 million order because $100,000 in chips are more expensive, the actions would be counterproductive,'' says Mr. Aguilar.

Fred VanVeen, a vice-president for Terradyne, a Boston-based high-tech company, worries the US actions could result in a Japanese backlash. ``We sell a lot of test equipment in Japan and we hope to sell more,'' he says. But, he adds, if it helps the semiconductor business, ``We're all for it.''

Part of the administration's actions included $165 million in tariffs in retaliation for the lack of access in Japan of US-made chips.

Darryl Hatano, director of international trade and government affairs for the Semiconductor Association, says the US share of market in Japan has been shrinking, not growing. Currently, the US represents 8.5 percent of the semiconductors sold in Japan. Historically, the Japanese have allowed the US 10 percent of the market, but under the terms of the broken agreement, the US would have seen its share of market rise to 20 percent by 1991.

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