RealTime IT News

Duties Cut on MCPs

The United States has negotiated an agreement with four high-tech trading partners on applying zero duties on multi-chip-integrated circuits, also known as multi-chip packages or MCPs.

MCPs are used in small computer products, such as cell phones, digital cameras and personal digital assistants (PDAs).

In a deal signed late last week, the United States agreed to drop its 2.6 percent rate on MCPs; Korea said it would slash its 8 percent duty on the chips; and the European Union agreed to get rid of its 4 percent tariff. Japan doesn't charge a tax on MCPs.

The countries are working through domestic approval procedures and have targeted Jan. 1 as the date when zero duties on MCPs are scheduled to go into effect.

"Multi-chip packages were not even in existence in 1999 and are now a major high-tech input to many advanced electronics products," United States Trade Representative (USTR) Rob Portman said in a statement.

U.S.-based companies account for more than 50 percent of global MCP production. Portman said the agreement will expand opportunities and boost sales for U.S. firms and workers in the $4.2 billion global market, which is expected to almost double by 2008.

"Applying zero duties on MCPs among our key semiconductor trading partners will boost sales and thereby enable this industry to grow even faster," Portman said.

Steve Altman, president of Qualcomm, added, "This agreement is a major advancement in liberalizing trade in MCPs, which have become the preferred type of semiconductor in the wireless communications sector."

George Scalise, president of the Semiconductor Industry Association, echoed Altman's statement in a statement.

"MCPs are a new, fast-growing product -- cutting tariffs to zero on this product is vital to ensure continued growth."