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US says it will get tough with Japan on trade. Baldrige irked by Japanese compliance with semiconductor accord

The National Security Council will soon consider whether to let a Japanese computer firm buy one of this country's most advanced semiconductor companies. Commerce Secretary Malcolm Baldrige told reporters at a breakfast meeting yesterday that he will schedule a meeting with members of the NSC, the Economic Policy Council, or both, to look at the acquisition of 80 percent of Fairchild Semiconductor Corporation by Fujitsu Ltd.

The move shows that the Reagan administration, while opposing protectionism, is getting fed up.

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``The Japanese have told us that we shouldn't expect to get any business from them in supercomputers,'' Mr. Baldrige said. ``At the same time, Fujitsu ... is over here trying to buy Fairchild - not so much for their technical ability, but for their distribution network.''

Kenneth Flamm, a computer specialist at the Brookings Institution, says Fujitsu can already distribute its supercomputers through its partial ownership in Amdahl Corporation. However, since Fairchild makes special-purpose chips for the military, which no one else supplies, some say national-security considerations should preclude Fairchild from falling into the hands of the Japanese.

Baldrige also expressed frustration with the way Japan has complied with the semiconductor accord set up last summer. The agreement, hailed as a possible solution to trade relations, was to prevent Japanese firms from dumping semiconductors at below-cost prices. The Commerce Department will finish its investigation within two weeks into whether the Japanese have circumvented the accord by selling cheap semiconductors abroad.

``If they haven't kept their agreement,'' he said, ``we will recommend action.''

Some people think that the approach is wrong, and that it does not correct the problems with the US semiconductor industry, but only penalizes companies and others that buy semiconductors with high prices. US companies reportedly send empty circuit boards to Japan, fill them with inexpensive chips, re-export them to the US, and repeat the process to get the less expensive chips.

Baldrige concedes that the accord has been ``the worst of both worlds,'' but he said the US had to get tough with the Japanese.

``If we had not moved in where they were so obviously dumping, it would have made a shambles of our whole trade laws,'' he said.

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