August 2, 1996
Vancouver, Canada
Joint Statement by the Government of Japan and the Government of the United States of America Concerning Semiconductors
1.Introduction
Bearing in mind that the Arrangement between the Government of Japan and the Government of the United States of America concerning Trade in Semiconductor Products (the Arrangement) expires on July 31, 1996, the respective governments have consulted on their relationship after the termination of the Arrangement as well as on global conditions facing the semiconductor industry.
2. Principles
The two governments share the view that cooperation with respect to semiconductors should be carried out based on the following principles.
(1)Importance of Market Principles
(2)Consistency with WTO Rules
(3)International Cooperation (mutual) 3.Cooperative Activities
(1)Both governments recognize that the private sector has the primary responsibility for meeting the challenges posed by the dramatic structural changes in the semiconductor industry.
(2) The two governments welcome the Agreement between EIAJ and SIA on International Cooperation regarding Semiconductors establishing the Semiconductor Council.
(3) Both governments affirm their attention to support industryto-industry cooperative efforts, and at least once per year the two governments will hold consultation to:
(4) Other governments whose national industry associations have joined the Council may join the consultations.
4.Global Governmental Reform
(1)To deal with the global challenges facing the semiconductor industry in the coming years, as well as to facilitate the sound development of the semiconductor industry, the Government of Japan and the Government of the United States call for the creation of a Global Governmental Forum (GGF), and invite other governments of major semiconductor-producing countries and other economies to participate in without any preconditions.
(2)The Government of Japan and the Government of the United States consulted with other prospective GGF participants on the scope of the GGF and the agenda for the GGF's first annual meeting was to be held no later than January 1, 1997. The following issues were discussed:
Trade and investment liberalization
Regulation, taxation and the like
Environment, worker health and safety and standardization
Protection of intellectual property rights
Basic scientific research
Promotion of the information society
5. Antidumping
Both governments reaffirm the need to cope with injurious dumping in conformity with the Antidumping Agreement.
6. Termination
7. Activities described in the Joint Statement will be terminated on July 31, 1999, unless otherwise agreed.
[Text found in Journal of Japanese Trade & Industry. No. 2 1997, p. 25]
96-26
FOR IMMEDIATE RELEASE
Tuesday, March 19, 1996
Contact: Anne Luzzatto, Dianne Wildman, Kirsten Powers
(202) 395-3230
FOREIGN SHARE OF THE JAPANESE SEMICONDUCTOR MARKET REACHES RECORD 29.6%
The foreign share of Japan's semiconductor market reached a new record at 29.6% in the fourth quarter of 1995 -- up over 3 percentage points from the previous record of 26.2% reached in the third quarter of 1995.
"I am gratified by the continuing strong performance of foreign companies in the Japanese semiconductor market," said USTR Mickey Kantor. "The gains we have seen demonstrate the progress that is possible when-governments commit to a long-term cooperative arrangement on market access. I am convinced that, with the continuing efforts by our two industries and governments, we will see even more progress under the U.S.-Japan Semiconductor Arrangement and its successor. Particular areas where we and our industry see strong potential for more progress include the telecommunications, automotive, and video games sectors; sales to small and medium-sized Japanese users; and design-in contracts. Continuing the framework of government and industry activities provided by the current Arrangement is critical in order to ensure that we achieve further progress in all these areas."
The market share figure was calculated by U.S. and Japanese government officials in accordance with the statistical system established under the 1991 U.S.-Japan Semiconductor Arrangement. The foreign market share averaged 16.7% in 1992, 19.4% in 199'3, 22.4% in 1994, and 25.4% in 1995. Despite this growth, the foreign share of the Japanese market remains relatively low compared to the situation in other markets. For example, Japanese firms held about 78% of the Japanese market as compared with only 24% of the world market outside of Japan. In the United States, now the world's leading producer of semiconductors, the foreign market share is estimated at about 39% in 1995.
Foreign Market Share Under the 1991 U.S.-Japan Semiconductor Arrangement
Q3 1991 14.3% Q4 1991 14.4% Ql 1992 14.6% Q2 1992 16.0% Q3 1992 15.9% Q4 1992 20.2% Ql 1993 19.6% Q2 1993 19.2% Q3 1993 18.1% Q4 1993 20.7% Ql 1994 20.7% Q2 1994 21.9% Q3 1994 23.2% Q4 1994 23.7% Ql 1995 22.8% Q2 1995 22.9% Q3 1995 26.2% Q4 1995 29.6%
*These market share figures were provisionally calculated based on the same assumptions on captive semiconductor suppliers that were made in previous quarters. The two governments will continue to seek to resolve differences concerning treatment of captive suppliers as soon as possible.
August 2, 1996
Vancouver, Canada
I. INTRODUCTION
SIA and EIAJ share a common recognition of the recent structural changes in the world semiconductor industry and markets, as well as the increasing importance of the world semiconductor industry in both technological and economic terms in advancing the information age. Expanding worldwide semiconductor usage is one of the keys to future progress in social and economic spheres around the globe. The increasing globalization of the semiconductor sector raises important issues that must be addressed effectively.
The world semiconductor business has greatly expanded beyond historical markets. Globalization is taking place on the demand side in the semiconductor sector, as well as on the supply side. While the Japanese and U.S. markets are the two largest markets today and will remain the two critical centers for research, development and design of new semiconductor products, new markets for semiconductors are developing, especially in the rest of Asia, which is expected to comprise 25 percent of the world market by the end of the century.
World production in this sector now exceeds $150 billion annually and could double again by the year 2000. Semiconductors are a core technology for 21st Century. Semiconductor research and development and manufacturing, along with the use of semiconductors in an increasingly wide range of products, has a significant impact on national and global economies.
Accordingly, the industries have agreed to create a Semiconductor Council (Council). The Council's purpose will be to enhance mutual understanding, to address market access matters, to promote cooperative industry activities, and to expand international cooperation in the semiconductor sector in order to facilitate the healthy growth of the industry from a long-term, global perspective.
The activities of the Council should be based on respect for market principles. The competitiveness of companies and their workers should be the principal determinant of industrial success and international trade. Markets should be open to allow private companies and workers to derive the benefits of their competitiveness and efforts. Markets should be open and competitive, without discrimination based on capital affiliation, and with purchasing decisions based on quality, cost, delivery, and service.
II. COOPERATIVE ACTIVITIES
A. Cooperative Activities Between Users and Suppliers
Because of the structural changes in consumption based on increased demand for personal computers, increasingly sophisticated and digital consumer electronics and mobile telecommunications equipment, semiconductors regardless of their nationality have increasingly become indispensable components.
At the same time, Japanese users have actively promoted design-in activities with suppliers around the world, and the seeking of competitive products regardless of nationality which meet required standards for quality, cost, delivery, and service (QCDS). This process contributes to the building of mutual interdependence between users and suppliers in a manner that is beneficial to both sides.
U.S. semiconductor suppliers have likewise made extraordinary efforts to serve the Japanese customer base and provide competitive products that meet Japanese needs.
The industries believe that these activities will help users find new opportunities to work with foreign suppliers to develop new markets and new products, and will also strengthen industry cooperation.
These activities will include meetings of the Steering Committee to provide for an exchange of views on the overall situation and outlook on market opportunities and trends and industry cooperation, as well as reports developed by any of its subcommittees or task forces, the development of new industry initiatives to overcome problems and/or seize new market opportunities, and provision of periodic informational reports to the governments.
The mutually agreed-upon cooperative activities in the Japanese market by industry associations, such as seminars, exhibitions, one-on-one meetings, and the like, will be continued. The activities include cooperation through subcommittees such as automotive semiconductors, telecom semiconductors, and emerging applications of semiconductors, as defined by the Steering Committee (STC). The industries would implement the ongoing activities, as judged to be necessary and appropriate; with new activities considered based on deliberations of the STC and existing activities terminated as their objectives are achieved. The Users Committee (UCOM) and its activities will be continued for a period of three years.
The industries would also make recommendations to the International Semiconductor Cooperation Center (INSEC) Board regarding how the joint activities of the industries and of INSEC could be more efficiently pursued.
Given the globalization of the semiconductor market, these types of cooperative activities should take place in every major region of the world.
These activities at the association level would be in addition to the activities already being undertaken by individual companies on a company-to-company basis.
B. Cooperative Activities Among Suppliers
Industries should engage in cooperative activities in a variety of areas.
(1) Standardization
In the semiconductor industry, technological innovation has brought about advances in manufacturing technology and, at the same time, massive increases in the investment necessary to create new production facilities. It is important to increase the efficiency of new investments, to the maximum extent possible, in order to sustain the growth and vitality of the industry, by developing standards for next generation manufacturing technology through international collaboration. For example, standardization of next generation wafer processing equipment for the 300 mm wafer is currently underway.
Open international standards should be created for manufacturing technology for the next generation of semiconductor products through an active international exchange of technological information.
(2) Environment, Worker Health and Safety
The industries should cooperate in promoting worker health and safety and developing environmentally compatible manufacturing processes. In order to ensure that industry development is consistent with environmental concerns, studies should be considered regarding environmental issues, such as the impact on the environment, if any, of various semiconductor manufacturing chemicals and processes. Further ways to use energy and water most efficiently should also be studied.
(3) Intellectual Property Rights
Information exchange and discussion should be held between the industries regarding the rules and appropriate protection of intellectual property rights for semiconductors in world markets. The discussion should be held on a country-by-country basis from a business person's viewpoint.
(4) Trade and Investment Liberalization
The industries should cooperate to develop recommendations for their respective governments aimed at eliminating tariffs and removing other barriers to trade and investment in the semiconductor sector.
(5) Market Development
The industries should work together to implement ideas to expand current markets and develop new markets worldwide for semiconductors and electronic equipment.
III. ANALYSIS OF SEMICONDUCTOR MARKET AND TRADE FLOW DATA
The semiconductor industry has become increasingly complex and diverse as a result of its globalization. To be in a position to promote the healthy development of the world semiconductor industry, it is essential to understand the composition and structure of world semiconductor markets and global semiconductor trade flows and to provide member companies, governments and the public with timely and accurate information.
The purpose of this analysis is not to create numerical targets, but instead to assess trends, better comprehend market dynamics, and promote deeper understanding. No one piece of data will be determinative of the assessment of market developments.
To further the purposes of the Council, industry experts will prepare and provide to member companies and governments quarterly market/trade flow reports. The industry experts will seek to prepare joint reports, but the industries reserve the right to prepare and distribute separate reports. The reports will include data on market size, market growth, and market shares of foreign semiconductor products in Council member markets and other major semiconductor markets.
The reports would be based on:
The reports would also include information from other available data on qualitative elements such as design-ins, joint ventures, long term and other cooperative relationships, and other factors relevant to the long term evolution of the industry.
IV. ORGANIZATION OF SEMICONDUCTOR COUNCIL
The activities described in Parts II and III shall, in principle, be carried out within the context of the Council.
The Council would meet at least once a year at a senior executive level. In addition, the Council will create a joint steering committee, composed of industry experts that would meet periodically as appropriate..
A preparatory committee should be created immediately by the industry associations to work out the details of the Council's methods of operation.
Other semiconductor industry associations would be eligible to join the Council on the condition that the country where the association is located meets one of two requirements:
(i) All tariffs on semiconductors have been eliminated; or
(ii) The country has committed that all tariffs on semiconductors will be expeditiously
eliminated or has suspended these tariffs pending formal tariff elimination.
V. RELATIONSHIP BETWEEN THE COUNCIL AND THE GOVERNMENTS
In addition to the quarterly reports in Part III provided to the governments, each industry association will regularly advise its government of activities undertaken on a cooperative basis and, as appropriate, make policy recommendations on issues of concern.
VI. ANTI DUMPING
The industries recognize the importance of avoiding injurious dumping consistent with national laws.
VII. CONSISTENCY WITH NATIONAL LAWS
All cooperative activities must be implemented in full conformity with the laws of each country, including antitrust laws.
VIII. OTHER
This agreement shall be subject to review after three years from the effective date of this agreement and may be terminated, in whole or in part, by mutual agreement by the parties.