[Congressional Record Volume 141, Number 38 (Wednesday, March 1, 1995)]
[Extensions of Remarks]
[Page E470]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]


        COUNTRY OF ORIGIN MARKING REQUIREMENT FOR SEMICONDUCTORS

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                            HON. BILL ARCHER

                                of texas

                    in the house of representatives

                        Wednesday, March 1, 1995
  Mr. ARCHER. Mr. Speaker, on February 15, I introduced H.R. 947, a 
bill which would exclude semiconductors and their containers from the 
country of origin marking requirements under existing trade law. 
Semiconductors, as classified under headings 8541 and 8542 of the 
Harmonized Tariff Schedule of the United States, include diodes, 
transistors, integrated circuits, and microassemblies.
  Country of origin markings for semiconductors present both cost and 
compliance problems for U.S. industry. While the cost of marking 
semiconductors is not great when amortized over a production run, the 
cost is significant in absolute terms. In addition, most of these 
components are small and therefore, difficult to legibly mark with the 
requisite producer identification, grade, quality, electrical values, 
and other symbols, making compliance with these marking requirements 
very arduous.
  One of the original intents of country of origin marking was as a 
consumer protection measure. However, only a tiny fraction of 
semiconductors are sold at retail. In general, semiconductor customers 
are unconcerned about semiconductor origin marking, since they are 
usually manufacturers who incorporate them into other products without 
reference to such marking. These customers are concerned about the 
semiconductor's quality, which is more a function of its producer than 
its origin.
  U.S marking requirements create difficulties for manufacturers trying 
to serve both U.S. and European Union [EU] markets. The basis for 
determining the country of origin for semiconductors differs between 
the United States and the EU for those semiconductors that are not 
wholly produced within one country. Therefore, these producers may 
violate the EU law when shipping semiconductors to the EU that are 
marked according to U.S. standards. The reason is that EU member 
states, while not requiring marking, do require that a product not be 
mislabelled.
  For example, the producer may diffuse circuit patterns on a wafer in 
one country, mount and encapsulate the chips in a second country, and 
import the semiconductors to the United States for final testing. These 
products may then be sold to domestic manufacturers or foreign 
purchasers. In this case, the United States considers the semiconductor 
the origin of the second country, and under current law, it must be 
marked accordingly. The EU, on the other hand, considers the country of 
origin to be the first country. In order not to violate EU law, the 
producer would have to remove the U.S. required marking before export 
from the United States, which is a possible violation of U.S. law.
  The Semiconductor Industry Association and the American Electronics 
Association, trade associations which represent the users and producers 
of semiconductors, support the exemption of semiconductors from country 
of origin marking requirements not only because of the cost savings, 
but also because of conflicting rules among our major trading partners. 
To answer concerns about government's need to know the country of 
origin for the purposes of administering its national laws, these 
semiconductor purchasers and users are committed to the development of 
a uniform coding system to satisfy international origin requirements. 
Therefore, the effective date of this legislation will be January 1, 
1996 to allow for the development of this system.
  For all the aforementioned reasons, existing country of origin 
requirements serve no useful purpose and simply add to the cost of 
producing and selling semiconductors in the international market. 
Elimination of these requirements is a simple, effective solution to 
these problems.


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