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Microchip skirmishes moudle big-our trade talks

KOBE, (Japan): Trade chiefs from the four big economic powers considered a broad range of multilateral matters on Saturday but skirmishes over a U.S.-Japan microchip pact muddled their meeting.

Liberalisation of telecommunications topped the agenda at the talks between trade ministers from Canada, the European Union (EU), Japan and the United States ahead of an April 30 deadline to forge a global pact to free up the sector.

But the ministers were also mulling a vast range of topics like China's membership of the World Trade Organisation, a four-way pact to abolish tariffs on information technology products, efforts to halt bribery in obtaining government contracts, and new rules to govern foreign investment.

In the morning, EU Trade Commissioner Sir Leon Brittain appeared to muddle progress on abolition of high-tech tariffs by linking this to a spat over a U.S.-Japan microchip pact.

EU spokesman Peter Guilford said Brittan told his counterparts the chip squabble needed to be sorted out so the four trade partners could forge a tariff accord.

"Sorting out the semiconductor issue is a prerequisite to the ITA (Information Technology Agreement)," he quoted Brittan as telling the other ministers.

The United States and Japan are at odds over a U.S. demand to roll over a five-year microchip pact expiring on July 31. Japan argues that doing so would violate the spirit of world trade rules and be out of tune with market trends which have seen foreign chip makers grab nearly 30 percent of its market.

On Friday, Brittan told Japan that governments ought not be involved in any chip pact but added that European industry wanted in on any private-sector deal for Japan.

The EU has long held that any bilateral deal gives an unfair advantage to U.S. chip makers.

"If anything, it should involve the EU and involve industry cooperation to achieve substantial and effective and non- discriminatory access," Guilford said. "It's better government is not involved."

Acting U.S. Trade Representative Charlene Barshefsky told reporters after the day's talks that the information product tariff deal should not be linked to microchips. "The ITA is in and of itself an initiative of such importance that it will...rise and fall on its own merits," she said.

Barshefsky said the EU was being inconsistent.-Reuter