Government/Authorities Meeting on Semiconductors. Arlington, Virginia, September 29, 2011 Chairman s Summary

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1 Government/Authorities Meeting on Semiconductors Arlington, Virginia, September 29, 2011 Chairman s Summary 1. The Government/Authorities Meeting on Semiconductors (GAMS) took place on September 29 th, 2011 in Arlington Virginia, chaired by the United States. In attendance were delegations of China, Chinese Taipei, the European Commission, Japan, Korea, and the United States. 2. Based on the report of the World Semiconductor Council (WSC) meeting held in Fukuoka, Japan in May 2011 and its recommendations to the GAMS, the GAMS discussed: the WSC market report; encryption standards and regulations; implementation of the MCP agreement and the definition of multi-component integrated circuits (MCOs); regional stimulus and bailout measures related to the semiconductor industry; reports from Customs on regional counterfeit enforcement efforts; environmental safety and health; conflict minerals; export/import regulations; and other issues of interest to the worldwide semiconductor industry. 3. GAMS welcomed the WSC s confirmation and reiteration of its 2010 statement on Best Practices in regard to encryption certification and licensing regulations. GAMS confirms and reiterates its own statement on the need for open markets, free from government discrimination and ensuring IPR protection are critical to the development of secure and innovative products. GAMS agreed that best practices for encryption certification and licensing regulations include the use of relevant international standards, and on the need for standards bodies to follow the TBT Committee Decision principles in developing international standards, and for members to apply these principles in determining which particular standards to use. GAMS notes that adoption of the security related norms and practices identified by the WSC in its 2011 recommendation would help to fulfill the GAMS 2010 statement on Best Practices that widely available products with cryptographic capabilities should, as a general rule, not be regulated. GAMS would welcome further WSC inputs on the semiconductor perspective on encryption and on the role of semiconductors in addressing global information technology challenges, and reporting back in With respect to the MCP Agreement, GAMS agreed with the WSC recommendation on the importance of work to expand the geographic coverage of the agreement and considers that including zero duties for MCPs in multilateral agreements could be the most practical way to accomplish this. In the meantime, GAMS took note of the importance attached by the WSC to having all current GAMS members accede to the MCP Agreement, and reiterated its 2010 statement recognizing the importance of GAMS members applying zero duties on MCPs. 5. GAMS reiterated its commitment to trade liberalization for new types of semiconductors, including multi-component ICs (MCOs). GAMS welcomed the progress on a definition

2 of MCOs, in particular, the technical work of customs experts on September and the JSTC input received by the GAMS on September 28. GAMS considers that the definition can be wrapped up quickly, and agrees to provide final comments by end- October on the MCO definition as appended to this document. GAMS also discussed a path forward for implementing a duty-free agreement on MCOs. While the MCP Agreement is one model, GAMS noted the growing industry interest in an expanded Information Technology Agreement, which could provide another implementation vehicle. GAMS agreed with the WSC view that if there is an expanded ITA, both MCPs and MCOs should be included. GAMS agreed to intensify consultations among GAMS members on implementation options, bearing in mind that several years have now elapsed since the WSC first recommended duty-free treatment for MCOs in GAMS emphasized the overall importance of protection of intellectual property rights, and reiterated its agreement with the WSC that the proliferation of counterfeit semiconductor products creates risks to public safety and health and to critical infrastructure. The GAMS welcomes the reports of Customs officials on countermeasures taken by five regions, at domestic, bilateral and multilateral levels, to fight the proliferation of counterfeit semiconductors. These reports were called for at the GAMS Customs Experts Working Group in 2009 and in the Chairman s Summary in In reviewing the reports, the GAMS agreed that progress has been made, but further efforts, including interdicting counterfeits at the border and vigorous prosecution of those that make and distribute counterfeits, are necessary given the growth of the problem. GAMS members will continue to implement appropriate measures (including domestic, bilateral and multilateral countermeasures) to deal with counterfeit semiconductors, share information on these measures with each other s customs agencies, and report the results of these measures at the 2012 GAMS, as appropriate. GAMS agreed with the WSC that effective cooperation between the industry and customs and enforcement agencies is essential to making progress against counterfeit semiconductors. 7. The GAMS welcomes the continued efforts of the WSC to identify areas for improvement of patent quality around the world. The GAMS also supports the WSC s plans to correspond regularly with the PTOs of GAMS members on patent quality improvement, and also to explore ways to coordinate patent quality efforts with WIPO. 8. GAMS considered the Regional Stimulus issues as outlined in the WSC Joint Statement and the accompanying Cover Letter to the GAMS. GAMS took note of the Joint Statement, which stresses that the competitiveness of companies and their products, not the intervention of governments and authorities, should be the principal determinant of industrial success and international trade. GAMS believe this is important during times of economic downturn or unexpected economic upheaval. GAMS notes and welcomes the WSC commitment to continue the discussion on these important issues. GAMS notes that there has been some uncertainty as to what information would be helpful to it in understanding this issue. GAMS requests that the WSC endeavor to achieve a better understanding on key concepts and questions in this area. The GAMS notes that in the 2009 Chair s Summary on Regional Stimulus, it specifically agreed to explore the possibility of the utilization of communication mechanisms to achieve a favorable

3 environment for the international semiconductor market and would appreciate further WSC input in this regard. 9. With respect to environment, safety and health issues, GAMS welcomes the work achieved so far by the industry to reduce emissions of greenhouses gases. GAMS notes the industry reduction announcement of a post-2010 reduction goal. GAMS stresses the importance of documentation and transparency and encourages industry to report additional detail on methods and progress. GAMS commends WSC efforts to eliminate non-essential uses of PFOS, and reduce other uses. GAMS agrees with the need for product regulations that promote a global market and are based on relevant international standards, including the use of international test methods and test labs. GAMS further supports that governments should work in consultation with industry in developing product regulations. Such measures will facilitate global trade, improve efficiency and prevent duplication of effort, and protect intellectual property. 10. The GAMS notes the WSC recommendation on conflict minerals that governments and authorities should take into account industry-led initiatives to encourage conflict-free trade as potential regulations or initiatives are being considered or coordinated. We will relay the WSC recommendation to the appropriate officials involved in these issues for each GAMS region. 11. The GAMS notes the WSC recommendation that industry is willing to support and contribute to discussions on export and import regulatory restrictions, and will convey this statement to appropriate government officials. 12. GAMS reached consensus on revisions to the GAMS Joint Statement in accordance with the provision for review every five years. The agreed revised Joint Statement is appended to this Chairman s Summary.

4 Annex Proposal for a definition of multi-component integrated circuits "This agreement covers multi-component integrated circuits", other than those of HS heading 8542 by virtue of Note 8 to Chapter 85 of the HS nomenclature, falling under HS headings , , , , 8473, [8501[.10]], , , , , , , , , , , , , , , , , , , , , , 9025, 9026, 9027, , , , , , 9032, 9033, and In this context a "multi-component integrated circuit" is defined as a combination of one or more monolithic, hybrid and/or multichip integrated circuits with one or more of the following components, but no other components: - inductors, transformers, static convertors of heading 8504; - magnets of heading 8505; - antennas of headings 8517, 8529 and 8543; ; - capacitors of heading 8532; - resistors of heading 8533; ; -diodes, transistors, and similar semiconductor devices; photosensitive semiconductor devices; light-emitting diodes; mounted piezo-electric crystals, all the foregoing of heading 8541; - lenses or other optical elements of heading 9001 or 9002; [-microsized electro-mechanical devices integrated on a semiconductor microelectromechanical systems (MEMS) of of headings 8532, 8533, 8543, 8548, 9026 and 9031; [MEMS are understood to be mechanical devices built on semiconductor chips using semiconductor fabrication technologie

5 s.] 1 ] interconnected and combined to all intents and purposes indivisibly whether or not on one or more insulating substrates, with or without leadframes, into a single package for assembly onto a printed circuit board or other carrier (for example, ceramic, glass or plastic), by means of, for example, pins, leads, balls, bumps or pads. [Its appearance should be like an integrated circuit. (suggested by China)] [It should contain an amount of integrated circuits, as defined for the purpose HS8542, constituting at least 70% of the total MCO value (declared by importers).] 1 Further consultation needed: the International Electrotechnical Commission s definition for MEMS reads as follows: Microsized electromechanical systems, in which sensors, actuators and/or electric circuits are integrated on a chip using a semiconductor process.

6 JOINT STATEMENT CONCERNING SEMICONDUCTORS BY THE EUROPEAN COMMISSION AND THE GOVERNMENTS/AUTHORITIES OF THE UNITED STATES, JAPAN, KOREA, CHINESE TAIPEI, AND CHINA VERSION 29/9/ Semiconductors are the building blocks of the information age. They are making possible continuing revolutionary progress in all facets of life, including communications, transportation, health care, scientific research, education and commerce, and are critical to raising global standards of living and contributing to sustainable economic growth 2. The Parties 2 to this Joint Statement have achieved virtually barrier-free trade in semiconductors among themselves, including the elimination of tariffs. They jointly seek a world environment devoid of barriers to trade and investment, and support and coordinate initiatives in the World Trade Organization (WTO) including the Information Technology Agreement (ITA) to achieve this objective. They endorse policies including the protection of intellectual property, positive approach to basic scientific research, positive approaches to global environmental protection, and promotion of the information society through appropriate regulatory and other policies that will foster sound and increased economic growth, and continued expansion of the benefits of the information age. These policies are intended to expand the global demand for semiconductors. 3. Relations among the Parties over issues affecting semiconductors are characterized increasingly by mutual understanding and cooperation, and the absence of friction. Cooperative efforts to respond to global challenges are likely to become more common and more important. 4. Representatives from the Governments / Authorities of the United States, Japan, Korea and the European Commission, constituting the Founding Members, have met together regularly since 1996, since 1999 joined by Chinese Taipei and since 2006 by China, to discuss and agree on issues affecting their semiconductor industries, and to receive and discuss reports and recommendations on policy matters from their industries which meet jointly in the World Semiconductor Council (WSC). Article I. PRINCIPLES 5. The Parties share the view that cooperation concerning semiconductors should be carried out based on the following principles: 2 Governments / Authorities of the United States, Japan, Korea, the European Commission, Chinese Taipei, and China.

7 5.1. The Parties should seek barrier-free trade in semiconductors in markets worldwide The competitiveness of companies and their products, not the intervention of governments and authorities, should be the principal determinant of industrial success and international trade Government and Authorities measures should be fully consistent with the letter and spirit of the WTO Agreements. Government and Authorities should avoid any form of discrimination The Parties recognize that the GATT 1994 condemns injurious dumping, and reaffirm the need to avoid the problem of injurious dumping through fair and effective anti-dumping measures consistent with GATT 1994 and the WTO Agreement on Implementation of Article VI of GATT 1994 (Anti-dumping Agreement. The Parties also recognize that the WTO Agreement on Subsidies and Countervailing Measures ("SCM Agreement") requires the notification of and prohibits or renders actionable certain forms of subsidies. They reaffirm the need for fair and effective countervailing duty measures, consistent with GATT 1994 and the SCM Agreement, to offset injurious subsidization The Parties will promote an open, equitable, rules-based, predictable and nondiscriminatory trading system that benefits all Parties in the pursuit of sustainable development The promotion, implementation and adequate enforcement of effective standards for intellectual property rights protection. Article II. GOVERNMENTS AND AUTHORITIES MEETING ON SEMICONDUCTORS 6. A Governments and Authorities Meeting on Semiconductors (GAMS) composed of representatives from each of the Parties at Director General or lower rank official level is established. The Parties will notify to the Chair the names and seniority of representatives in advance of the meeting. The GAMS shall meet as often as necessary but not less than once a year for the purpose of affording Parties the opportunity to consult on any matters related to the principles of the Joint Statement and respond to the recommendations elaborated by the WSC. 7. The GAMS will discuss and engage in cooperation concerning global issues related to semiconductors such as standardization, customs nomenclature, environment, health and safety at work, intellectual property rights, trade and investment liberalization, and worldwide market development. In order to increase transparency among GAMS members and in line with the above principles, GAMS members are encouraged to supply appropriate information to GAMS on relevant government support programs in the semi-conductor sector.

8 8. The Chair of the GAMS will be held in turn by each Founding Member for a term of twelve months in the order to be decided by consensus. The Chair will invite the Parties to the annual meeting after the annual meeting of the WSC or at the request of any other Party. 9. The Chair will circulate a draft agenda to the Parties, taking account of previous GAMS conclusions and recommendations made by the WSC. The Chair will draft meeting conclusions to be adopted by common agreement of all Parties. 10. The Parties will meet with representatives of the WSC to receive and discuss the recommendations of the WSC regarding policies of governments and authorities which may affect the future outlook of the global semiconductor industry. After receiving the recommendations of the WSC, the parties will meet among themselves to discuss issues affecting semiconductor industries, industry recommendations and appropriate policies and actions of governments and authorities. 11. The Chair may, upon agreement with the other GAMS Members, organise a workshop on a specific issue of impact to the semiconductor industry. The workshop would be open to the participation of representatives from governments, authorities, international organizations, industry, and the scientific / academic world, as appropriate. Article III. NEW MEMBERSHIP 12. Other Governments or authorities whose national/regional industry associations have joined the WSC may become Parties upon agreement of all GAMS members, and if they confirm their support for the objectives of this Joint Statement and conclusions adopted by the GAMS, and their commitment to adhere to any specific agreement concluded among GAMS members. Article IV. REVIEW 13. This Joint Statement will be subject to review every five years. It may also be modified in whole or in part at any time by mutual consent of the parties.