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Trade Policies and the Semiconductor Industry

In: The Political Economy of American Trade Policy

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  • Douglas A. Irwin

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.

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This chapter was published in:

  • Anne O. Krueger, 1996. "The Political Economy of American Trade Policy," NBER Books, National Bureau of Economic Research, Inc, number krue96-1.
    This item is provided by National Bureau of Economic Research, Inc in its series NBER Chapters with number 8703.

    Handle: RePEc:nbr:nberch:8703

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    References

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    1. Paul M. Ong & Don Mar, 1992. "Post-layoff earnings among semiconductor workers," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 45(2), pages 366-379, January.
    2. C. Fred Bergsten & Marcus Noland, 1993. "Reconcilable Differences? United States-Japan Economic Conflict," Peterson Institute Press: All Books, Peterson Institute for International Economics, Peterson Institute for International Economics, number 34, July.
    3. Gary Clyde Hufbauer & Kimberly Ann Elliott, 1994. "Measuring the Costs of Protection in the United States," Peterson Institute Press: All Books, Peterson Institute for International Economics, Peterson Institute for International Economics, number 77, July.
    4. Krishna, Kala, 1989. "Trade restrictions as facilitating practices," Journal of International Economics, Elsevier, Elsevier, vol. 26(3-4), pages 251-270, May.
    5. Irwin, Douglas A & Klenow, Peter J, 1994. "Learning-by-Doing Spillovers in the Semiconductor Industry," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 102(6), pages 1200-1227, December.
    6. Dick, Andrew R, 1991. "Learning by Doing and Dumping in the Semiconductor Industry," Journal of Law and Economics, University of Chicago Press, University of Chicago Press, vol. 34(1), pages 133-59, April.
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    Cited by:
    1. Kala Krishna & Suddhasatwa Roy & Marie C. Thursby, 2000. "Can Subsidies for MARs be Procompetitive?," NBER Working Papers 7624, National Bureau of Economic Research, Inc.
    2. Jong-Wha Lee & Phillip Swagel, 2000. "Trade Barriers And Trade Flows Across Countries And Industries," The Review of Economics and Statistics, MIT Press, vol. 79(3), pages 372-382, August.
    3. Krishna, K & Thursby, M & Roy, S, 1996. "Implementing Market Access," Papers, Purdue University, Krannert School of Management - Center for International Business Education and Research (CIBER) 96-011, Purdue University, Krannert School of Management - Center for International Business Education and Research (CIBER).
    4. Paqué, Karl-Heinz & Stehn, Jürgen & Horn, Ernst-Jürgen & Scharrer, Hans-Eckart & Koopmann, Georg, 1996. "National technology policies and international friction: Theory, evidence, and policy options," Kiel Discussion Papers 279, Kiel Institute for the World Economy (IfW).
    5. C. Niranjan Rao, 2004. "The role of intellectual property rights in information and communication technologies," Centre for Economic and Social Studies, Hyderabad Working Papers, Centre for Economic and Social Studies, Hyderabad, India 61, Centre for Economic and Social Studies, Hyderabad, India.
    6. Rodrik, Dani, 1994. "What does the Political Economy Literature on Trade Policy (Not) Tell Us That We Ought to Know?," CEPR Discussion Papers, C.E.P.R. Discussion Papers 1039, C.E.P.R. Discussion Papers.
    7. Paqué, Karl-Heinz, 1995. "The case for technology policy: A tentative evaluation," Kiel Working Papers 714, Kiel Institute for the World Economy.

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