The Semiconductor Industry Association (SIA), which claims more than 90% of US chipmakers as members, officially threw its weight behind US trade negotiators’ bid to oppose changes to international antidumping laws at the World Trade Organization summit in Seattle yesterday. The SIA, which is lobbying world leaders on behalf of chipmakers at the conference, branded the proposals by Japan and Korea, an effort to weaken US trade laws.
Dumping refers to the practice of flooding national markets with cheap products to undercut domestic competitors. It is used in commoditized markets by suppliers able to offset losses from the practice on profitable operations elsewhere. US Chipmakers were particularly stung by Asian producers’ use of the tactic in the 1980s, when 9 out of 11 DRAM makers were driven out of business.
Under rules enacted during the previous round of WTO talks started in Uruguay in 1996, countries can impose penalty taxes for three years on companies found guilty of the tactic. However Japan and Korea are taking issue with the power granted to victim companies under the rules to petition governments for an extension of the tax penalties beyond three years. They are also understood to be pressing for a change to the definition of production costs, which would result in a lower calculation for the cost price of products and reduce the scope for anti-dumping measures to be invoked.
The motion to overhaul current anti-dumping rules is also being opposed in Seattle by executives of chipmakers, Intel Corp, Micron Technology Inc, Motorola Inc and Texas Instruments Inc. The disciplines of trade rules such as anti-dumping laws actually enhance popular support for a global trade system, said Michael Maibach, vice president for government affairs at Intel, who was the semiconductor industry’s official representative at Wednesday’s US Trade press conference. With world trade growing twice as fast as world GDP, we vitally need trade rules so that markets are opened and that competition is based on excellence and not on which firm can lose money the longest, he added. Maibach said the upcoming round of WTO negotiations should focus on guaranteeing duty-free international e-commerce.
