The US and Taiwan have negotiated an agreement to maintain tariff-free trade in so-called multi-chip packages (MCPs), a new form of integrated circuit that packs more computing power into individual circuits.
MCPs have growing importance given the explosion of ever-smaller electronic products such as cellphones, digital cameras and hand-held electronic devices.
The agreement was announced by US Trade Representative Rob Portman at a press conference in Washington on Thursday. The US simultaneously announced parallel agreements with Japan, Korea and the EU.
While Taiwan does not impose tariffs on MCPs, a trade official told the Taipei Times that the agreement will assure that Taiwan does not do so in the future. However, the agreement might serve to benefit Taiwan's MCP producers, because the US has agreed to cut its 2.6 percent duty on the products.
Korea will end its 8 percent duties and the EU will cut its duties of up to 4 percent, the US trade office said. Japan, like Taiwan, has no current tariffs on MCPs.
The agreements are the latest efforts by the international trade community to eliminate tariffs on all information technology goods in major world markets. The Information Technology Agreement, reached in Singapore by 29 major producing nations in December 1996, called for the phase-out of all tariffs on information technology between July 1997 and January 2000.
However, that agreement did not envision the creation of MCPs, in which as many as four chips are crammed into a single integrated circuit housing without increasing its size. As MCPs began to be developed in recent years, some countries imposed duties on their import, seeing a major loophole in the earlier tariff-elimination agreements. The current pacts will close those loopholes.
The agreement will bring MCPs into the overall tariff-cutting scheme when it takes effect on Jan. 1, if all parties complete their domestic approval processes in time.
"Multi-chip packages were not even in existence in 1999, and are now a major high-tech input in many advanced electronic devices," Portman said. "Applying zero duties on MCPs among our key semiconductor trading partners will boost sales and thereby enable this industry to grow even faster," he said. MCP production was valued at more than US$4 billion last year, the USTR estimates.
Portman noted that the MCP agreement was reached just in advance of next month's international trade negotiations under the World Trade Organization's so-called Doha Round, scheduled to take place in Hong Kong. Those negotiations seek to eliminate tariffs on manufactured goods in all sectors.
"This agreement will serve as a shot in the arm for these talks," Portman said.
A draft of the MCP agreement was worked out on Sept. 15 at the annual Government/Authorities Meeting on Semiconductors, which is attended by the US, Taiwan, Japan, Korea and the EU.
RSS