Comparative Case Studies on U.S.-Japan and U.S.-China Semiconductor Trade Disputes

In the past few decades, the rapid development of technologies has significantly reshaped people’s life. The new coming era of artificial intelligence has also signaled the increasing importance of the technology industry. Due to this trend, the competition in technology-related sectors has gradually become one of the top positions when forming governmental economic and trading policies. Meanwhile, certain technology industries are closely related to national security, and therefore are considered having significant strategic importance. This strategic concern might also directly impact government’s mindset. Thus, while defining trade and economic policies and resolving potential trade conflicts, the government might not only take economic and commercial factors solely into account, but also will rely on other political considerations. In some circumstances, strategic and political factors might play bigger roles.

The U.S. used to be a leading power in the semiconductor industry, but this role was later challenged by Japan in the late 1970s to 1980s due to the rise of the Japanese semiconductor industry, as well as their “unfair” practices perceived by the U.S. government. Similarly, starting in the late 1990s, the boom in the use of computers and technology in China has led to a rapid development in the Chinese semiconductor industry. As a result, trade disputes over semiconductors also emerged between the U.S. and China.

This paper examines the similarities and differences between the U.S.-Japan semiconductor trade dispute and the U.S.-China semiconductor trade dispute, and effects of the two trade arrangements on domestic semiconductor industries in Japan and China. This paper argues that despite Japan and China were both huge economic entities in East Asia with high growth during the two periods, they represented two different types of threats against the U.S.

Although strategic and national security factors, and economic interests both played important roles in the two dispute cases, this paper argues that the specific political and policy contexts were the key factors pushing forward the progress of negotiating the two trade disputes. While mechanisms used during the two dispute settlement process were different, this paper finds out with regard to post-effects on domestic semiconductor industries in the two countries, the orientation of the mechanisms, rather than the mechanisms themselves matter.