THE JAPAN-U.S. SEMICONDUCTOR ARRENGEMENT

Demonstrated Success in Achieving Results Through Free Trade

Q.

What is wrong with extending the Japan-United States Semiconductor Arrangement?

A.

(1) Continuing government involvement, typically seen in the Arrangement, can only have a negative effect. Unnecessary government involvement amounts to nothing more than managed trade. Semiconductor market activity should be left to private-sector companies operating in accordance with the rules of free trade.

(2) The Arrangement, which attempts to identify the nationality of semiconductors, is now obsolete and meaningless. With the rise of Asian producers from the Republic of Korea and elsewhere, and with the dramatic recovery in competitiveness on the part of the United States semiconductor manufacturers, there have been great structural changes in the semiconductor industry. The semiconductor manufacturers around the world are promoting cooperation among themselves, for example in joint manufacturing ventures, as they respond to the changes in the market. Thus, the structural the changes in the semiconductor industry have made it difficult to identify "foreign semiconductors."