Japan Would Strengthen Key Trade Agreement

by Semiconductor Industry Association

Last week, SIA submitted comments to the Office of the United States Trade Representative (USTR) in support of Japan’s participation in the proposed Trans-Pacific Partnership Trade Agreement (TPP), a free trade pact that encourages open markets and international cooperation:

“Given Japan’s status as a top semiconductor trading partner, and a valued member of the world trading community, SIA supports the inclusion of Japan in the TPP. SIA encourages the government of the U.S. and Japan to strive for trade and policy solutions that fuel innovation, propel business and drive international competition in order to maintain a thriving global semiconductor industry.”

Japan is a significant player in the global semiconductor industry. In 2012, Japan was the 13th leading destination for U.S. semiconductor exports and the 6th leading source of U.S. semiconductor imports. In 2012, total two-way semiconductor trade between the United States and Japan totaled over $3.9 billion with U.S. exports to Japan accounting for almost $900 million and U.S. imports from Japan accounting for roughly $3 billion. The importance of the Japan market to U.S. companies is much greater since they often design and manufacture products in the United States, export to third countries for assembly and test, and ship to Japan from these third countries. SIA estimates that the U.S. semiconductor industry shipped $13 billion worth of semiconductors to the $41 billion Japan market in 2012.

Currently, 11 countries participate in the TPP, representing a market of 658 million people and a gross domestic product (GDP) of $20 trillion. Including Japan would strengthen the TPP, as long as Japan abides by the high standards set by current participants and does not disrupt the goal of concluding TPP negotiations by the end of this year.

SIA’s comments to USTR also outlined some of the semiconductor industry’s top priorities within the context of overall TPP negotiations. One such priority is the inclusion of strong encryption language that presumes no regulations and/or restrictions on the commercial trade of goods containing encryption:

“Outdated government security policies remain in place that place unnecessary restrictions on the use of and trade in products containing encryption. These restrictions provide too much opportunity that they may be implemented in a discriminatory manner … Both global collaboration and open markets for commercial encryption technologies should therefore be strongly encouraged as they inherently promote more secure and innovative ICT products.”

In its comments, SIA also highlighted other priorities related to the trade secrets, semiconductor counterfeiting and regional stimulus measures/provisions of aid to failing companies.

SIA supports broader TPP issues for the information and communications technology (ICT) sector including the free flow of information, location of data servers/infrastructure, digital products, regulatory transparency, conformity assessment, and market access, including TPP countries’ participation in the World Trade Organization’s Information Technology Agreement (ITA).

The Japanese and American semiconductor industries have a close working relationship as evidenced by our longstanding membership in the World Semiconductor Council (WSC) – a body that furthers cooperation on policy matters related to the worldwide industry. SIA looks forward to working with our association counterparts in Japan as the negotiations move forward on this 21st century trade agreement.

SIA’s complete comments are available here.