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To: Tony Viola who wrote (18782)	6/10/1999 3:51:00 PM
From: Moonray	Respond to of 25814

U.S., Japan Expand Chip Accord to Include Europe, Korea, Taiwan Washington, June 10 (Bloomberg) -- The U.S. and Japan expanded their 1996 agreement aimed at removing barriers to semiconductor trade to include the European Union, Taiwan and South Korea, placing 95 percent of the world's chip production under the market-opening accord. The 1996 agreement, which is set to expire July 31, has given the U.S. a substantial foothold in the Japanese market and forged ties between companies in the two countries, U.S. trade officials said. ''Our 1996 bilateral agreement with Japan has worked well and led to an unprecedented level of cooperation between Japanese semiconductor users and U.S. suppliers,'' said U.S. Trade Representative Charlene Barshefsky in a written statement. ''The foreign share of the Japanese semiconductor market has exceeded 30 percent in every quarter since the beginning of 1997.'' The latest agreement comes at a time when global semiconductor sales are rebounding, with an industry trade group projecting on Tuesday they will expand 12.1 percent this year, marking the first time the industry will post double-digit growth since 1995. All the signatories of the accord already adhere to the 1997 Information Technology Agreement, which eliminated tariffs on trade in computer chips, computers and telecommunications equipment. No More Dumping Today's agreement sets goals for eliminating tariffs in countries that still impose them on imports. The accord also discourages government export subsidies and opposes practices like ''dumping,'' or selling goods below fair market value or the cost of production. In addition, it seeks to reinforce intellectual property protection, raise environmental standards and improve worker safety. The agreement enables companies in different countries to discuss trade issues by bringing chief executives together, an industry group said. ''There are other tariffs such as taxes on e-commerce that slow the growth of e-commerce and prevent people from getting the benefit of semiconductors,'' said Daryl Hatano, vice president of international trade for the Semiconductor Industry Association in San Jose, California. Those duties ''would reduce demand for our products.'' The countries signing the agreement represent more than 95 percent of the world's production and about 90 percent of consumption of semiconductors, Hatano said. Chip Sales Surge Hatano's association said this week worldwide chip sales will grow to $140.8 billion in 1999 and surge 15.4 percent to $162.5 billion in 2000. Chip industry sales have declined for the past three years, and the last time growth was more than 9 percent was in 1995, when sales soared 42 percent. Digital signal processors, specialized chips used in everything from cameras to computers, are leading the recovery, as well as memory chips, used mostly in personal computers. The industry was hammered in the past few years because of excess manufacturing capacity, slowing demand and plummeting prices. The memory-chip market, which declined 19 percent in 1997 and 21 percent last year, will make a comeback by increasing 19 percent this year, the SIA said. The microprocessor market is forecast to rise 16 percent in 1999. The U.S. market will remain the largest geographic region, representing about a third of chip revenue worldwide, and the Asia-Pacific will be the second largest as it recovers from big declines during the economic turmoil in that region. The industry will be helped by rising personal-computer shipments, which are expected to grow 21 percent in the second quarter, according to International Data Corp., which raised its forecast from 16.5 percent growth. o~~~ O