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INTERNATIONAL
POLICY
The semiconductor
industry continues its expansion to every corner of the globe, advancing
and enriching the lives of people the world over, by improving health
and safety, enhancing education and learning, and offering new opportunities
for work, recreation and entertainment. Free and open international trade
is a primary engine of global growth and development, and continues to
be a principal goal of SIA's policy agenda.
In 2004, SIA pursued a number of global trade objectives, including:
- Improving intellectual property protection in China
- Increasing market access in China
- Advancing environmental initiatives and trade liberalization
through the WSC
- Eliminating new tariffs on emerging semiconductor
devices
- Supporting new trade agreements
- Upholding strong anti-dumping laws and effective
anti-dumping remedies.
Improving Intellectual Property
Protection in China
Intellectual property protection in China has become an increasingly important
issue. SIA has been pursuing the issue with the US and Chinese Governments,
and through the World Semiconductor Council and related Governments/Authorities
Meeting on Semiconductors (GAMS) - which brings together the US, Japan,
Europe, Korea, and Chinese Taipei.
As part of SIA efforts in this area, SIA held the first IP Seminar in
China in November 2004, in conjunction with the US and Chinese Governments
and the China Semiconductor Industry Association (CSIA).
The seminar addressed a cross section of important topics, including the
benefits of IP protection in fostering China's development, a review of
international IP trade agreements, IP protection measures taken by China,
China's layout design law, a review of the World Semiconductor Council
recommendations on layout design, and guidelines foundries could use to
comply.
At SIA's urging, the WSC adopted a formal recommendation that governments/authorities
should employ a fast track procedure allowing for a quick review of counterfeit
activity and appropriate and effective action to stop it. All members
also agreed to encourage manufacturers/foundries to establish IP layout
protection guidelines so that semiconductor designers or suppliers of
designs provide written assurances regarding their rightful ownership
of the semiconductor layout design.
The WSC also noted that the WTO requires that countries have both IP laws
and effective enforcement procedures, and that enforcement in some countries
remains ineffective and lacking in deterrence. In December 2004 the Chinese
government announced improved criminal enforcement policies for IP cases,
which, while short of what we had sought, can have an important deterrent
impact if fully implemented.
IP protection in China will remain a high priority for the SIA and the
US Government in 2005.
Increasing Market Access in China
In 2004, SIA worked closely with the US and Chinese governments in removing
two major obstacles facing the US semiconductor industry in China-a discriminatory
value-added tax (VAT) rebate and a proprietary wireless encryption standard
(WAPI).
Under the VAT scheme, foreign producers of semiconductors were forced
to pay a higher VAT rate than domestic Chinese producers, favoring domestic
production over imports. China committed to end the VAT policy, but has
indicated it will issue a replacement subsidy policy, expected in April,
2005. The WAPI standard would have placed Chinese companies at a disadvantage
in world markets and would also have required US chip makers to transfer
technology to Chinese firms for wireless products. In both cases, our
relationships with key Chinese government officials proved useful in resolving
our differences.
SIA will continue to work with the US government in monitoring China's
WTO commitments, in particular with respect to semiconductor development
incentives, intellectual property, national treatment, and product standards.
SIA is closely monitoring potential new Chinese government measures designed
to encourage the development of the semiconductor industry, including
a proposed "IC development fund." SIA is determined to assure
that any promotional measures are developed and implemented in a transparent
manner and are consistent with China's WTO obligations.
Advancing Environmental Protection and Trade Liberalization
Through the WSC
Once again in 2004, SIA successfully pursued many key policy objectives
through the World Semiconductor Council (WSC), composed of executives
from SIA members, as well as our Japanese, Korean, European and Taiwanese
counterparts. The Governments/Authorities Meeting on Semiconductors (GAMS)
- comprised of officials from the US Government and officials representing
all WSC regions - convenes once a year to receive the WSC's recommendations.
ESH: The WSC has an active environmental program. Our goal is to
support sound, scientifically based, positive environmental policies and
practices. Specific projects include PFC emission reduction, energy savings,
chemical management, and quantitative targets. We have met or exceeded
our targets every year. On energy savings, the WSC is actively supporting
cooperation and the sharing of information among members to foster the
efficient utilization of energy resources. Chemical management is also
a key focus of WSC efforts - specifically in the areas of chemical risk
assessment and pollution prevention.
Trade Liberalization: The WSC took positions on a number of trade
issues, including support for intellectual property protection, full transparency
of government policies and regulations, non-discrimination for foreign
products in all markets, voluntary and industry-led standards, an end
to investment restrictions tied to technology transfer requirements, and
zero duties on multi-chip packages.
SIA continues to believe that integrating China into the WSC, and the
PRC into the GAMS, is vital. Doing so will provide us a valuable forum
through which to address issues before they become harmful.
Eliminating Tariffs on Multi-Chip Packages
In the past, SIA supported deals - particularly the Information Technology
Agreement (ITA) - that eliminated tariffs on virtually all information
technology goods in all major world markets. Recently, however, new advances
in technology that were unanticipated when the tariff deals were signed
have led customs authorities around the world to begin to re-impose duties
on some semiconductor products. So-called multi-chip packages (MCPs) are
a key example of this situation.
Evolution in the packaging of certain semiconductor devices - which allows
more than one piece of silicon inside a package but does not alter the
underlying basic functionality of the product - has caused these products
to be reclassified for customs purposes and led to the imposition of duties
for the first time in years. SIA maintains that this is an evolution in
packaging, not a revolutionary change in product, and that these products
should be treated for tariff purposes as any other semiconductors, which
are duty free in all major markets.
The agreement SIA seeks would eliminate tariffs in the US (currently 2.6
percent), Korea (down from 8 percent to 2.6 percent following US pressure)
and Europe (ranging up to almost 4 percent), and would lock in Japan and
Taiwan at zero.
The WSC took a strong stand on the tariff issue at its May 2004 meeting,
requesting that GAMS "achieve zero duties on multi-chip integrated
circuits as soon as possible". Members of the GAMS are working hard
towards a tariff elimination agreement, which would call for signatories
to eliminate all tariffs on MCPs. The United States Trade Representative
(USTR) is actively engaged with its counterparts from the European Union,
Korea, Japan and Chinese Taipei, seeking to have an agreement take effect
in 2005.
SIA will seek to broaden coverage to include all WTO members as soon as
possible.
Supporting New Trade Agreements
SIA supported last year's successful passage of the Australia and Morocco
Free Trade Agreements (FTAs), which include strong rules and set a good
precedent for future free trade agreements.
SIA will continue to monitor the FTAs under negotiation, such as bilateral
and regional agreements in the Middle East, Latin America, Asia, and Southern
Africa, and support passage of concluded agreements, such as CAFTA and
Bahrain. In 2005, other major trade issues expected in Congress are renewals
of trade promotion authority and WTO membership.
SIA supports expanded trade liberalization in the current WTO Doha Round
negotiations, and is encouraging extension of the Information Technology
Agreement to additional countries and products. SIA will continue to advocate
reduction of tariff and non-tariff barriers, removal of impediments to
e-commerce, and elimination of copyright levies on digital products.
Upholding Antidumping Laws and Effective Antidumping
Remedies
Existing WTO rules on antidumping promote competition on a fair basis,
creating an environment where success is determined by products, technology,
and manufacturing capabilities not by selling below the cost of production
or using price discrimination to gain export market share. The antidumping
remedy is especially important to US semiconductor firms, given the sector's
history of injurious dumping by other countries. Many WTO members favor
weakening WTO rules on antidumping and subsidies, while SIA opposes any
changes that would weaken the law.
SIA will continue to support the maintenance of an effective remedy against
dumping and opposes any weakening of US antidumping laws or the ability
of WTO members to impose measures to remedy injurious dumping. SIA also
believes that subsidies hold the potential to disrupt market-based competition
and distort trade. Specific financial intervention by governments to assist
individual companies should be discouraged and should be subject to remedial
action where such assistance causes injury or other adverse trade effects.
Fighting for Free, Fair and Open World Trade
SIA will decisively combat impediments to free trade, in the form of subsidies,
tariffs, tax rebates, restrictive standards or dumping, the pernicious
practice of selling below cost or domestic market value to gain foreign
market share. The Association will continue to fight for free, fair and
open trade in global markets, as the greatest engine of global growth
and development the world has ever known.
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