Share this story
Close X
Switch to Desktop Site

US tries to chip away at Japan's high-tech market

Electronic chips the size of fingernails hardly bring a sparkle to the average consumer's eye, but they lie at the heart of the growing US-Japanese trade dispute.

US producers of high-technology gadgetry - ''a field of the future,'' one expert calls it - are world leaders in quality and innovation. But the Japanese are coming up fast.

About these ads

Americans in the high-tech field say they can handle anyone's competition - if it is fair. The problem, according to industry officials, is that Japanese trade is not fair.

George Scalise, senior vice-president of Advanced Micro Devices, cites semiconductor trade in Western Europe as proof of the contention that Americans can compete on equal terms.

Semiconductors, which form the basis for locking thousands of bits of information into tiny ''integrated circuits,'' or chips, are indispensable to final electronic systems, including computers.

American and Japanese semiconductor firms face a common hurdle in the European Economic Community (EEC) - a 17 percent tariff on their products.

US firms, says Mr. Scalise, hold 65 percent of the European market. Japanese companies have about 8 percent, with the rest of the European market going mainly to European semiconductor manufacturers.

Japanese firms, by contrast, sell 25 percent of their entire semiconductor output to the United States. If the Japanese market were equally open, says Mr. Scalise, US companies could sell Japan an estimated $2.6 billion worth of integrated circuits yearly. Sales now total $450 million.

Japan, according to American experts, supports a ''target industry'' policy, which, in the US view, makes it very hard for American firms to penetrate the Japanese high technology market.

About these ads

A relevant Japanese law singles out - or targets - industries and sectors that require shielding from foreign competition, until they are ready to launch out on the world market themselves.

Firms so targeted, according to Scalise, are free to form cartels, receive low-cost government loans, and are granted accelerated depreciation write-offs on their equipment. This last provision, he says, is important in the semiconductor industry, where equipment is rapidly outmoded.

Thus in Japan people are pooled and research money is channeled to accomplish the most good. Firms making up the cartel become not only producers but major consumers of electronic products, giving preference to Japanese output.

''Each time a US innovative advance is made,'' says a US expert, ''Japan welcomes it, then closes the door when Japanese firms have mastered the new technique.''

Widespread preference by US consumers for Japanese quality and design creates a huge US trade deficit with Japan - $18.1 billion last year, according to the US Commerce Department. It probably will more in 1982.

Bills swirl in congressional hoppers to restrict Japanese imports, one way or the other. Reciprocity is a word increasingly heard, meaning that the US should give Japanese exporters no more market freedom in the US than American exporters are allowed in Japan.

The Reagan administration opposes protection and favors free trade. But pressure for job protection is growing from industries hard-hit by Japanese competition.

Essentially, trade experts say, pleas from old-line industries like autos and steel are rooted in the past, whereas the plight of the US semiconductor industry - still the best in the world - looks toward the future.

The thrust of legislative efforts by high tech companies is to open up foreign markets, before the competitive advantage of US firms is sapped.

Though Japan is the most visible example, other nations - including European members of the Common Market, plus developing powers like Mexico and Brazil - are erecting nontariff barriers to protect nascent high technology industries from the rude winds of foreign competition.

Most protectionist bills now in Congress favor older industries, which - certainly in the case of steel and automobiles - face major restructuring before they can meet Japanese and other foreign competition head-on.

A different type of measure, introduced in the House by Rep. Sam Gibbons (D) of Florida, the so-called high technology trade act of 1982, is tailored to meet the concerns of a variety of technological firms.

The bill does not demand balanced high tech trade between countries, but rather equal treatment in each other's home markets. Freedom to invest, as well as trade, is stressed.

The president would be given authority to negotiate agreements to eliminate foreign restrictions on high technology trade and investment - an authority he lacks under present law.

Should negotiations fail, the president would be authorized to take steps to protect injured US companies from unfair import competition.

Follow Stories Like This
Get the Monitor stories you care about delivered to your inbox.