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Tuesday, 31 March 1987
Page: 1759

Mr LINDSAY —Will the Minister for Trade inform the House of the implications for Australia of the current trade dispute between the United States of America and Japan over semiconductor markets?

Mr DAWKINS —Australia is concerned about the developing friction between the United States and Japan, the origin of which was the bringing into effect of an arrangement in September last year involving trade in semiconductors. The United States was concerned about the dumping of semiconductors in the United States and as a result of this arrangement Japan agreed to monitor not only the export prices of semiconductors but also a wide range of products in which they are used. The arrangement also involved monitoring the prices of semiconductors being exported to other nominated countries. As well, it provided that Japan should open its market up especially for semiconductors coming from the United States.

The United States is now complaining that the Japanese have not been able to prevent the dumping of Japanese semiconductors in third markets. As a consequence, it has threatened that as from 17 April a wide range of new tariffs will be introduced on trade worth some $300m a year involving data processing machines and other equipment in which semiconductors are used. This question has been of some concern to a number of countries and it has been raised in the context of the General Agreement on Tariffs and Trade-GATT. The major concern of other countries is that this arrangement seems to divide world markets between Japan and the United States of America in a way which would, of course, affect competition in those markets.

There is also the suggestion that it would lead to price rises in other markets. This would be a matter of concern to Australia as well as to other countries because of our heavy reliance on imports of semiconductors and goods which contain semiconductors, and it would of course increase the costs for semiconductor consuming industries within Australia. There was also the fear that this arrangement could have led to preferential treatment being given to the United States in terms of access to the Japanese market. As I said, this would be of concern to Australian industry. We do rely on imports of these goods.

The Prime Minister has been making a lot of allusions to the Premier of Queensland. I might just mention that at the time we decided sand mining at Shelburne Bay would not proceed, the Premier of Queensland said that this would prevent the development of a silica chip industry in Australia. He seems to think that making silica chips is rather like making potato chips. The other point is that this action has wide implications for the world trading system. Consultations are going on in the context of the GATT and Australia, with our Ambassador to the GATT, as Chairman of the GATT Council, involved in trying to bring the parties together in order to resolve the impasse. In the context of the reform of the world trading system, which Australia is pursuing along with other countries, this kind of deterioration in the trading system is of concern to us. I warn those who have a lingering attachment to bilateral deals as a solution to global trading problems that this incident shows how quickly matters can get out of hand.