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Agreement
provides a “shot in the arm” to multilateral negotiations
on
manufactured goods
Washington –
US Trade
Representative Rob Portman today announced that the
United States
has negotiated an agreement with the European Union,
Japan, Korea,
and Taiwan in
applying zero tariffs on multi-chip integrated circuits (also known as
“multi-chip packages” or “MCPs”). MCPs are an evolutionary new
semiconductor used wherever miniaturization is desirable – for example, in cell
phones, digital cameras and Personal Digital Assistants (PDAs).
U.S.
headquartered companies account for over 50% of global MCP production, which was
valued at over $4 billion in 2004.
Under the agreement, the United States will cut its 2.6% duty on MCPs,
while Korea will cut its 8% bound* duty and the European Union will cut duties
bound at rates as high as 4%. Japan
currently does not have duties on MCPs.
“Multi-chip packages were not even in existence in 1999, and
are now a major high-tech input to many advanced electronics products,” said
Portman. “Applying zero duties on MCP’s among our key semiconductor trading
partners will boost sales and thereby enable this industry to grow even faster.
U.S. leadership to bring the MCP agreement to
conclusion is reflective of the priority the
United
States attaches to moving the high-tech trade
agenda forward.
“This agreement is not only important for
U.S. companies
but for the ongoing WTO Doha Development Agenda negotiations. A key goal of the
United States in
the DDA negotiations is to eliminate tariffs on manufactured products in all
sectors and this agreement will serve as a shot in the arm for these
talks.”
The United
States is a significant exporter of MCPs. In
2004, US companies accounted for almost half of the $213 billion world
semiconductor market in terms of sales – more than any other country. Over
three-quarters of U.S.-owned wafer capacity is in the
United States,
despite the fact that three-quarters of sales are outside the
United States.
The Administration consulted closely with the Congress over the course of the
negotiations.
On September 15, at
their annual Government/Authorities Meeting on Semiconductors (GAMS), the
United
States, Japan, Korea, the European Union and
Taiwan concluded a final draft text of an agreement
to cut applied duties on MCPs. The parties are now working through domestic
approval procedures, and the agreement is expected to take effect on
January 1, 2006.
* A
bound rate is the highest rate that a WTO Member can apply on a
most-favored-nation basis. In other words, when a WTO Member binds a
tariff rate, that Member commits not to raise the rate above the bound
rate. However, a lower rate can be applied.
A fact sheet on the
agreement is available at www.ustr.gov
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