ROANOKE TIMES
Copyright (c) 1996, Roanoke Times
DATE: Saturday, August 3, 1996 TAG: 9608050045
SECTION: BUSINESS PAGE: A6 EDITION: METRO
DATELINE: VANCOUVER, BRITISH COLUMBIA
SOURCE: THE NEW YORK TIMES
After marathon negotiating sessions that were laden with election politics on both sides of the Pacific, the United States and Japan agreed Friday to a new and unusual trade accord governing the computer-chip industry, one that reflects the revival of the U.S. electronics industry since the first accord was signed a decade ago.
The Japanese government, which wanted to kill off the chip agreement, signed the three-year agreement only after the United States acceded to Tokyo's demand that the two governments get out of the business of measuring the share of Japan's market that foreign companies have secured.
That statistic, which was a central feature of two past agreements, has long been despised by the powerful Japanese bureaucracy because it has been used to set targets for further inroads into the Japanese market, and was the basis for sanctions imposed against Japan in 1987.
The Japanese minister of international trade and industry, Shunpei Tsukahara, said Japan had won what it wanted in the negotiations. ``We have been able to put an end to a system of managing trade by reviewing market share, taking into account numerical targets,'' he told reporters.
Both sides will now periodically examine statistics collected by private industry - though Japan and the United States have measured the market in very different terms.
``Japan and the U.S. have made good on the pledge of President Clinton and Prime Minister [Ryutaro] Hashimoto to put in place a new agreement,'' Charlene Barshefsky, the acting U.S. trade representative said Friday.
``The challenge for us was to put in place a new agreement that recognizes that the Japanese market can no longer be characterized as closed, but that continues our vigilance.'' Foreign companies command nearly a third of the Japanese market; U.S. companies have about 20 percent.
The new semiconductor agreement differs from past accords between the United States and Japan in several respects.
Unlike the 1986 accord, signed when U.S. companies had 9 percent of the market and there was enormous political pressure on the Reagan administration to save endangered U.S. companies, this accord will be carried out chiefly by industry associations in the two countries. The two governments will only oversee it with what Barshefsky calls ``a light hand.''
That was one of Japan's key demands.
Retaining that light hand was a crucial goal for the U.S. negotiators, who feared that without government involvement, Japanese companies might backslide, buying Japanese-made chips instead of the foreign competition.
That pressure could be particularly intense in the next year, because there is an oversupply of many types of computer chips that has depressed prices - and sharply cut the profitability of chip-making. Those are conditions that would ordinarily lead Japanese executives to press for less competition in their home market.
The U.S. semiconductor industry applauded the accord. ``We are very appreciative of the support from Congress and the Clinton administration,'' said William Weber, chairman of the Semiconductor Industry Association and vice chairman of Texas Instruments.
For the first time in the history of trade agreements between the two countries, other nations will be invited to join the semiconductor accord. That is a recognition that many more countries have begun producing a wide variety of chips - not only for computers, but also for automobiles, fax machines and every kind of household and industrial equipment.
Barshefsky failed to get the Japanese to move on another important area that Clinton and Hashimoto had agreed in June to settle by July 31: the deregulation of Japan's insurance market.
With Japan's big insurance companies reeling from huge setbacks in real estate and the stock market, the Japanese government has backpedaled from previous agreements to open the largest part of that market.
It was clear that the negotiators in Vancouver were simply too exhausted to even take up the subject.
LENGTH: Medium: 78 lines ILLUSTRATION: PHOTO: 1. headshot of Barshefskyby CNB2. chart - Chip Leaders AP