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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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Suggested Citation

  • Douglas A. Irwin, 1996. "Trade Policies and the Semiconductor Industry," NBER Chapters,in: The Political Economy of American Trade Policy, pages 11-72 National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberch:8703
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    References listed on IDEAS

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    1. Krishna, Kala, 1989. "Trade restrictions as facilitating practices," Journal of International Economics, Elsevier, vol. 26(3-4), pages 251-270, May.
    2. Irwin, Douglas A & Klenow, Peter J, 1994. "Learning-by-Doing Spillovers in the Semiconductor Industry," Journal of Political Economy, University of Chicago Press, vol. 102(6), pages 1200-1227, December.
    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, number 77.
    4. Paul M. Ong & Don Mar, 1992. "Post-Layoff Earnings among Semiconductor Workers," ILR Review, Cornell University, ILR School, vol. 45(2), pages 366-379, January.
    5. C. Fred Bergsten & Marcus Noland, 1993. "Reconcilable Differences? United States-Japan Economic Conflict," Peterson Institute Press: All Books, Peterson Institute for International Economics, number 34, January.
    6. Dick, Andrew R, 1991. "Learning by Doing and Dumping in the Semiconductor Industry," Journal of Law and Economics, University of Chicago Press, vol. 34(1), pages 133-159, April.
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    Citations

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    Cited by:

    1. Krishna, Kala & Roy, Suddhasatwa & Thursby, Marie, 1998. "Implementing Market Access," Review of International Economics, Wiley Blackwell, vol. 6(4), pages 529-544, November.
      • Krishna, K & Thursby, M & Roy, S, 1996. "Implementing Market Access," Papers 96-011, Purdue University, Krannert School of Management - Center for International Business Education and Research (CIBER).
      • Krishna, K & Roy, S & Thursby, M, 1996. "Implementaing Market Access," Papers 96-003, Purdue University, Krannert School of Management - Center for International Business Education and Research (CIBER).
      • Kala Krishna & Suddhasatwa Roy & Marie Thursby, 1996. "Implementing Market Access," NBER Working Papers 5593, National Bureau of Economic Research, Inc.
    2. Thomas Hoeren & Francesca Guadagno & Sacha Wunsch-Vincent, 2015. "Breakthrough technologies – Semiconductor, innovation and intellectual property," WIPO Economic Research Working Papers 27, World Intellectual Property Organization - Economics and Statistics Division.
    3. C. Niranjan Rao, 2004. "The role of intellectual property rights in information and communication technologies," Centre for Economic and Social Studies, Hyderabad Working Papers 61, Centre for Economic and Social Studies, Hyderabad, India.
    4. 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.
    5. Kala Krishna & Suddhasatwa Roy & Marie Thursby, 2001. "Can subsidies for MARs be procompetitive?," Canadian Journal of Economics, Canadian Economics Association, vol. 34(1), pages 212-224, February.
    6. Rodrik, Dani, 1994. "What does the Political Economy Literature on Trade Policy (Not) Tell Us That We Ought to Know?," CEPR Discussion Papers 1039, C.E.P.R. Discussion Papers.
    7. Lutao Ning, 2008. "State-led Catching up Strategies and Inherited Conflicts in Developing the ICT Industry: Behind the US-East Asia Semiconductor Disputes," Global Economic Review, Taylor & Francis Journals, vol. 37(2), pages 265-292.
    8. 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).

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    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations

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