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EU warns Japan,

US to settle

semiconductor row

KOBE, (Japan): Europe warned on Saturday there can be no progress in cutting tariffs on high technology products until Japan and the United States settle their row over semiconductors, officials said.

The European Union (EU) issued the warning during the second day of the meeting of trade ministers from Canada, the EU, Japan and the United States in the western Japanese city of Kobe.

The EU delegation official said there was no possibility of repealing tariffs on information technology products if Tokyo and Washington renew their bilateral semiconductor agreement expiring in July.

The four economies are holding quadrilateral talks here in a bid to find a common position on the Information Technology Agreement (ITA) proposed by the United States to lift tariffs on all information-related products by 2000.

"It will not be possible to cut or eliminate tariffs without sorting out the semiconductor agreement," the EU official told reporters. "Sorting out the agreement is a prerequisite of the ITA."

Japan and the United States have remained divided over whether to renew the accord, which provides for a minimum foreign share of 20 percent of the Japanese market.

The European Union is opposed to an extension, saying numerical targets constitute "managed trade."

Semiconductors, along with computers and telecommunications-related products, are on the list of tariff reductions under the planned pact.

During a meeting early Saturday with US Trade Representative Charlene Barshefsky, officials quoted Japanese International Trade and Industry Minister Shumpei Tsukahara as saying it was "natural for both countries to abandon the agreement."

Barshefsky said Washington would keep looking for an agreement on semiconductors in a bid to ensure the Japanese market was truly open.-AFP