Five Regions Sign Zero-Tariff Agreement for MCPs
November 11, 2005
The United States, Europe, Japan, Korea, and Taiwan recently signed a draft agreement to eliminate duties on MCPs (Multi-Chip Packages) used in portable devices such as mobile phones. China and other developing countries may also join in the agreement, which will be taking effect in January 2006. Semiconductors are covered by the 1996 WTO Information Technology Agreement, and are thus exempt from import tariffs in most of the world. However, because multi-chip packages have more than one chip, several governments reclassified them and imposed duties on these products. The United States levies a 2.6% duty, Europe 3.8%, and Korea 2.6%. Under the new agreement, these duties will be eliminated, while Japan and Taiwan did not impose these duties and thus will remain tariff-free. The five regions in this agreement currently account for more than 70% of global MCP production, and the new agreement is expected to stimulate expansion of this US$4 billion MCP industry.