Us Japan Semiconductor Agreement

As a result of the agreement, Japanese DRAM chips cost European computer manufacturers an additional 30 to 40 percent. Example: the European minimum price of a 1 meg DRAM chip is 3.90 USD; The price in the United States is $5.00. The 4 Meg chip costs $18 in Europe and $30 in the United States (it is Japan Digest, July 25, 1990, p. 1. These higher prices last year led U.S. computer manufacturers to ask the U.S. Department of Commerce to abandon the anti-trust agreement with Japan. (Commerce Department takes first step Towards Removing Price Floor for Japanese Chips,” Japan Digest, October 3, 1990, p. 3.) Seven Japanese chip producers submitted similar applications to Dessa Commerce. (Ibid.) These cases are still ongoing. 3) Set the price at which Japanese companies sell semiconductors in collaboration with the U.S.

government; The Bush administration and Congress should assess the damage done to U.S. computer manufacturers and consumers by the current agreement. If the government and Congress really want America to be competitive in semiconductors and other industries, policymakers should create the macroeconomic environment. They could, for example, remove the barriers created by the tax system for investment, savings and innovation. What will not encourage greater competitiveness are protectionist agreements, such as those for computer chips, that protect American companies from real market forces. Therefore, the Bush administration should announce as soon as possible that it will not renew the semiconductor chip agreement with Japan. To avoid such a situation, the Bush administration may well do to order the Commerce Department or the Federal Trade Commission to investigate the negative effects of the semiconductor agreement on U.S. computer manufacturers.

More detailed data may well be important ammunition in the fight against free trade and protectionism and prevent an economic policy as counterproductive as the semiconductor cartel in the future. The Japanese market was very competitive, with most companies competing directly with each other for finished products. On the other hand, few U.S. semiconductor manufacturers also produce finished products. This indicates that the Japanese government has not played a key role in supporting the development of the industry. Michael Porter, of Harvard Business School, notes in a competitiveness study that “one of the strongest empirical results of our research is the link between national rivalry and the creation and perseverance of competitive advantages in an industry. (Michael Becker, “Semiconductor Protectionism: Goodbye Mr Chips,” Citizens for a Sound Economy, Issue Alert No. 9, August 27, 1986, p. 1.) On the contrary, policy makers in Washington often respond to short-term complaints from specific interest groups, without fully considering the consequences of their actions.

This was the case with the original semiconductor agreement. Some U.S. computer chip manufacturers have recognized the short-term benefits, but manufacturers who use these chips in their computers have suffered. U.S. competitors. Today, the U.S. semiconductor industry is divided into three levels of competitors. At the top, there are very large companies that manufacture semiconductors and some finished products such as calculators and mobile phones. These include Motorola Corporation and Texas Instruments Corporation.

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