Electronic and electrical products are among the most significant commodities for trade because of their necessity in telecommunications, transportation, computers, control systems and consumer appliances. At the same time, competition in the electronics industry is presenting unprecedented challenges to the industrial sector. Product life cycles are shortening, development cycle times are decreasing, profit margins are declining, and new technology is readily- available to anyone who aggressively pursues it.

In the U.S., the electronics industry, is the largest manufacturing employer, accounting for nearly 11 percent of the U.S. gross domestic product. The industry is expected to grow at a rate of 4 percent per year throughout the remainder of the 1990s. At the same time however, the U.S. electronics industry- has been losing about 3 percent of world market share per year, since the mid-1980s, a market that today is about three-quarters of a trillion dollars and is expected to be $2 trillion by the beginning of the next century.

In the past twenty years, the preponderance of semi conductor, component and circuit card manufacture and assembly has shifted from the U.S. and U.K to Japan and, over the past ten years, to Korea, Taiwan, Malaysia and Singapore. In fact, in 1994 Taiwan supplanted the U.K as the fifth largest IC manufacturer in the world and Malaysia has become the largest exporter of electronic products. China, Thailand, India, and other countries with the appropriate mix of skilled and low-cost workers are now vying for opportunities to become new manufacturing bases, while Japan, Korea, Taiwan and Singapore have continued to automate their factories to adjust for higher wages and to provide more timely and reliable products.

Japan, Malaysia and Taiwan have targeted electronics as an industry Metal to their industrial success, and can, to a large degree, declare victory- particularly in the high-volume, low-cost electronic assembly industry. Japan's electronic exports to the United States in 1992 were valued at $30.4 billion, 32 percent of Japan's total exports to the United States. In 1992, the United States had a negative trade balance with Japan of $7.3 billion in consumer electronics and $7.8 billion in computers and peripheral equipments As The Wall Street Journal pointed out on July 12, 1993, "Until we do something about making camcorders, flat-panel display Vs, and other things that we import because there is no real domestic source, we're never going to get rid of our trade deficit with Japan in 1993, was $59.3 billion-a 23 Percent increase over 1992.
 

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