Trade Politics and the Semiconductor Industry

83 Pages Posted: 1 Jul 2003

See all articles by Douglas A. Irwin

Douglas A. Irwin

Dartmouth College - Department of Economics; National Bureau of Economic Research (NBER)

Date Written: May 1994

Abstract

A coalition of well-organized semiconductor producers along with compliant government agencies (USTR and the Commerce Department) brought about a 1986 trade agreement in which the United States forced Japan to end the 'dumping' of semiconductors in all world markets and to help secure 20 percent of the Japanese semiconductor market for foreign firms within five years. The antidumping provisions of the 1986 agreement, which later proved to be partly GATT-illegal, resulted in such steep price rises for certain semiconductors that downstream user industries (primarily computer systems manufacturers) forced the U.S. government to remove those provisions in the 1991 renegotiation of the agreement. The equally controversial 20 percent market share provision - based on circumstantial evidence that the Japanese market was closed -provided 'affirmative action' for the industry in its efforts to sell more in Japan, but has been criticized as constituting 'export protectionism.' This paper examines how the U.S. semiconductor industry became the beneficiary of this unique and unprecedented sectoral trade agreement by analyzing the political and economic forces leading up to the 1986 accord and shaping subsequent events.

Suggested Citation

Irwin, Douglas A., Trade Politics and the Semiconductor Industry (May 1994). NBER Working Paper No. w4745. Available at SSRN: https://ssrn.com/abstract=420309

Douglas A. Irwin (Contact Author)

Dartmouth College - Department of Economics ( email )

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National Bureau of Economic Research (NBER)

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