Semiconductors, since they became commercialized in the 1970s, have had a special place in the global economy. Semiconductors made possible the dawning and growth of the information age. The two leading producers in that timeframe were Japan and the United States. They fueled Japan’s pre-eminence in consumer electronics. They were the foundation of Silicon Valley. Chips are high-value, low-weight, and low bulk products that can travel physically across borders with ease. Trade in semiconductors was an imperative for both countries. While that period was an era characterized by trade friction between the United States and Japan, and semiconductor trade was no exception, nevertheless, the first joint public policy initiative by the governments of Japan and the United States at the request of their respective industries, was to remove all tariffs on semiconductors through a trilateral agreement. It was applied on an MFN basis.
The most important part of this story, however, as carried forward into the present, is the fact that the U.S. and Japan found common ground in an arrangement for semiconductors reached in Vancouver, Canada, in August 1996. The agreement was unprecedented in format. It envisaged the creation of two parallel venues, intergovernmental meetings (GAMS) and an industry council (ultimately, the WSC). Representatives of the European Commission,2 suspicious of what the US and Japan might agree to, were nearby in another hotel. To allay their concerns, I kept them currently informed.
I and my counterpart, the counsel for the Japanese industry, jointly drafted a charter for the industry council. I proposed a series of purposes, which were debated by the two associations and adopted. It was contemplated from the outset that other regions would join. This was not an arrangement for special status for either Japanese or American producers. It was to be inclusive and nondiscriminatory. The price for entry into membership was according duty-free trade to semiconductors. Market forces and fair trade were to determine competitive outcomes. The foundational principle was that “The competitiveness of companies and their products, not the intervention of governments and authorities, should be the principal determinant of industrial success and international trade.”
The European Electronic Component Manufacturers Association (EECA) and the Korea Semiconductor Industry Association (KSIA) became formal participants at a meeting in Hawaii in April 1997. The venue was then named the World Semiconductor Council, consisting of CEOs of semiconductor companies in the four regions, and staffed by a group of mid-level company executives, meeting three times a year in a configuration known as the Joint Steering Committee (JSTC).
Meetings of the WSC followed annually, with hosting shared on a rotating basis. The next meeting was in Carlsbad, California. At the Fiugi (Italy) meeting in 1999, the Charter was updated and Taiwan Semiconductor Industry Association (TSIA) became a member. The officials representing the five parties, the three governments (U.S, Japan, Korea) and two authorities (EU Commission and Chinese Taipei), present at a subsequent 1999 meeting in Brussels issued a new Joint Statement as their operational inter-governmental agreement.
