960428

EU to press Japan

over access

to chip market

BRUSSELS: EU demands for greater access to Japan's huge market for semiconductors will dominate talks between Japanese ministers and the European commission here on Monday, officials said. The commission, which represents the EU in trade issues, will press a delegation led by Foreign Minister Yukihiko Ikeda, to give a clear signal of support for the expansion of a US-Japan bilateral semiconductor accord to include the EU.

The United States made it clear at talks last week in Kobe that it opposed expanding the five-year-old pact, under which Japanese industry is required to source at least 20 percent of its chips from foreign suppliers.

The US is seeking to renew the accord after it expires on July 31 but the Japanese government is reluctant to continue with a deal it believes constitutes "managed trade".

Officially, Tokyo insists that the decision to renew is for industry to take. "The trouble with that is, as everybody knows, Japanese industry takes its cue from government," said a senior commission official.

"We have made it clear we oppose setting fixed market-share targets for the same reasons as the Japanese. But if the accord is to be renewed we want to be included and we would like to see a clear signal from the Japanese government that they want to go in that direction."

Although the US-Japan accord refers to all foreign semiconductor producers, the EU maintains that it is discriminated against: European suppliers have managed to obtain less than one percent of the Japanese market.

Trade Commissioner Sir Leon Brittan, who leads the EU delegation, will reiterate that the EU will not support a proposed global agreement on reducing and eliminating tariffs on all information technology products, unless it gets assurances on the semi-conductor issue.

Of the three major economic blocs, the EU has the highest tariffs on electronic components and the commission is unlikely to get agreement from member states to cut them without the sweetener of greater export opportunities for semi-conductors.

Despite tensions over the semi-conductor issue, Monday's talks take place against a background of trade relations which have improved enormously since the mid-eighties, when conflicts over Japan's trade surplus dominated the world economic agenda.

The EU believes that it has reaped the benefit of an approach which deliberately avoids the "megaphone diplomacy", practiced by the United States.

EU-Japan trade has grown twice as fast as general global trade since 1985 and the ratio of EU exports to imports has grown from 0.44 to 0.7.

"We are now dealing with the nitty-gritty of smaller disputes that no longer overshadow the broader relationship," a commission source said.

Among the more high profile of these smaller disputes is the feeling that in Europe that Airbus faces discrimination in gaining access to the Japanese aircraft market. The national carrier Japanese Airlines (JAL) has never bought an Airbus plane.

EU officials acknowledge that the absence from the Airbus' portfolio of a rival to Boeing's B747, the only jumbo capable of carrying more than 400 people, put it at a disadvantage in the Japanese market.

But they also suspect that JAL's "Buy America" policy is the result of a behind-the-scenes deal between government and the company designed to keep relations with Washington ticking over smoothly.

Monday's talks will also focus on the progress of Japan's deregulation programme and plans by Brittan to take a delegation of leading industrialists to Japan next month.

The delegation is to examine opportunities in six sectors where the potential offered by already-achieved liberalisation has not been fully exploited by European companies: non-insurance financial services, food processing, electrical appliance manufacturing, medical equipment, telecommunications services and semi-conductors.-AFP