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Trade Strike Force Urges Action Against Japan

November 14, 1985

WASHINGTON (AP) _ President Reagan’s top trade advisers are recommending that the president initiate a major unfair trading complaint against Japan for ″dumping″ low- cost computer parts in the United States, administration sources said Thursday.

The proposed move, if carried out by the president, would mark the first time the administration has moved to limit imports since the president’s ″free trade, fair trade″ speech in September.

Thus far, all actions taken by the administration have been aimed at opening foreign markets to U.S. goods, rather than restricting imports.

The recommendation, proposed by the Cabinet-level ″strike force″ on trade created by Reagan in September, came a day after the Republican-control led Senate voted 60-39 to limit textile imports, primarily from Asian countries. The Democratic-ruled House has passed similar legislation.

White House spokesman Larry Speakes said Thursday that the bill, which the administration has criticized as protectionist, was an ″almost certain candidate for a veto.″

″It appears that Congress has voted for the heart of the protectionist measures, but they fell short of the strength to override a veto,″ Speakes said. Overriding a veto requires two-thirds majorities in both houses.

Administration sources, who spoke only on the condition of anonymity, said the strike force recommendation was sent to the president’s desk now in hopes that he would act on it before leaving for the Nov. 19-20 summit in Geneva with Soviet leader Mikail Gorbachev.

The panel is headed by Commerce Secretary Malcolm Baldrige. Other members include U.S. Trade Representative Clayton Yeutter, Treasury Secretary James Bake, Labor Secretary William Brock and Secretary of State George Shultz.

An aide to Baldrige, B.J. Cooper, confirmed that the recommendations had been forwarded to the president but declined to discuss their contents.

However, sources said the task force determined that the pricing of certain Japanese semiconductors in U.S. markets - 256 kilobit and 64 kilobit computer chips, specifically - amounted to blatant ″dumping.″

Dumping is when foreign companies sell merchandise at less than the cost of production, thereby capturing a large share of a market and driving off domestic manufacturers.

The U.S. seminconductor industry has been battered by imports, and has already sought government relief from the U.S. International Trade Commission, which issued a preliminary finding last week upholding their claim of severe financial damage from ″dumping.″

The president could either join these cases already under way, or initiate new ones of his own, under the strike force recommendation.

In either event, heavy tariffs or import fees against Japanese semiconductor imports could be the end result of such intervention.

The actions would be separate from administration efforts now in progress to negotiate with Japanese firms and government officials to open more Japanese markets to U.S.-made semicondutors.

″This is just the first round, the highest priority recommendations from the strike force,″ said an administration official who refused to be identified. ″There will be other recommendations to follow.″

The official said the case against Japanese semiconductor imports was clear-cut and ″did not lack for evidence. It’s pretty obvious they’re dumping chips.″

According to U.S. semiconductor manufacturers, Japanese are selling 256K chips - a major element in the new generation of high-capacity computers - for as little as $3.88 each, about half the ″fair value″ price.

The semiconductor industry claims it has lost 54,000 jobs this year because of the competition from imports, and some major manufacturers have left the field entirely.

The trade strike force is also working on a recommendation calling for more forceful action against countries, including Taiwan and South Korea, that fail to protect U.S. patents, trademarks and copyrights, the sources said. However, this recommendation has not yet been sent to the president’s desk, they said.

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