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Trade Politics and the Semiconductor Industry

  • Douglas A. Irwin

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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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 4745.

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Date of creation: May 1994
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Publication status: published as The Political Economy of American Trade Policy, Anne O. Krueger, ed.,pp. 11-66, (University of Chicago Press, 1996).
Handle: RePEc:nbr:nberwo:4745
Note: ITI
Contact details of provider: Postal: National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.
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  1. 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.
  2. 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.
  3. 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 133-59, April.
  4. 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.
  5. 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.
  6. 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.
  7. Kala Krishna, 1985. "Trade Restrictions as Facilitating Practices," NBER Working Papers 1546, National Bureau of Economic Research, Inc.
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