1. MCO Status Report to JSTC
February 24, 2011
Shanghai, China
Semiconductor Industry Association in Europe

2. Content 2010 GAMS Summary MCO Status report
Technical expert meeting on MCO, 22 February 2011, Shanghai
JSTC MCO Working Group
JSTC action items - proposal
JSTC 24 February MCO Status report to JSTC

3. GAMS welcomes the work achieved so far by industry to define multi-component (MCO) products and notes the WSC’s support for rapidly reaching an agreement on a definition for MCO products. In this context, GAMS noted that the informal meeting on the definition of MCO was held in September 15 in attendance of industry and government/authority of China, Chinese Taipei, the EC, Japan, Korea, and the United States. GAMS noted that the EU proposed a new definition of MCO and welcomed this proposal. GAMS agreed to move forward with this proposal submitted by the United States to the WCO in 2008 as a starting point.
Based on the social contribution of semiconductors mentioned in paragraph 3, GAMS underlined the importance of facilitating the growth of the market for such semiconductor products through zero duties on MCO with an appropriate definition that captures these new trends.
GAMS therefore invites its members to consult their customs experts without delay to start to develop and finalize preferably before April 2011 a definition of what constitutes MCO products as was done for the MCP definition, starting from the above proposal from the US and using appropriate expertise from industry. GAMS agreed to work out the practical details within the next month. Given the urgency to provide a growth oriented and predictable framework for industry and based on the above intermediate timelines, GAMS envisages to reach consensus on duty free treatment in its GAMS 2011 meeting.
JSTC 24 February MCO Status report to JSTC

4. MCO status report (1)
September January 2011: clarification meetings with Authorities
24-25 January 2011: Informal GAMS Working Group on MCOs organised by USITC in Washington DC
Attended by Customs officials and GAMS representatives from five regions
Representatives from Semiconductor Industry Associations in Europe, the US and Japan participated in part of the meeting
Semiconductor Industry Associations in Europe and in the US presented on behalf of JSTC the MCO issue based on semiconductor industry technology trends and MCO applications
Outcome of the inter-government meeting: MCO non-paper
JSTC 24 February MCO Status report to JSTC

5. MCO status report (2)
the MCO non-paper by Informal GAMS Working Group on MCOs represents and advancement on the issue and the current status of reflections among Governments which attended the meeting
The process agreed by Customs at Informal GAMS WG meeting:
several points for clarification remain, a.o. indicated by bracketed text: Authorities seek industry guidance  MCO non-paper distributed to industry with eye to industry meeting in Shanghai
Future government calendar agreed by Customs authorities:  
By Feb 15: clean up the language as much as possible by mid February
By Feb 22: get more input from China both in the short term and after the industry workshop in Shanghai on February 22
By April 1: Customs incorporate the inputs received and give final document to the trade negotiators to take the next step.
JSTC 24 February MCO Status report to JSTC

6. Technical expert meeting on MCO, Shanghai, 22 February 2011
Additional clarifications on MCO were provided
Technology trends
MCO technical characteristics
Current classifications of MCO
Samples
Implementation of an eventual free trade agreement at border
Consensus on relevance of MCO definition to facilitate free trade in these new types of semiconductor products
SIA in China to discuss within industry and report back to Government
SIA in China put forward that the definition of MCO should consider further distinguishing features of an MCO such as connection mechanism between an MCO and a PCB, and the the term of ‘other carriers’ be described in more detail or deleted
Associations to take into account comments from SIA in China with regards to the preference to focus on products meeting the MCO definition rather then products falling under the list of HS headings included in the first paragraph on the non-paper on MCO.
JSTC 24 February MCO Status report to JSTC

7. JSTC MCO Working Group
Discussion on the nature of the “Informal MCO GAMS working group meeting” held in Washington on January 2011 and clarification on the fact that the customs officials met under the GAMS framework to fulfill the action item in the Chairman’s summary of the GAMS 2010 meeting that GAMS members “consult their customs experts without delay to start to develop and finalize preferably before April 2001 a definition of what constitutes multicomponent (MCO) products.”
Report on the outcome of the Washington informal GAMS MCO working group meeting.
JSTC 24 February MCO Status report to JSTC

8. JSTC MCO Working Group
Discussion on possibility to provide common industry position
Since Chinese Government was not able to participate in Washington GAMS MCO work group meeting, a common reaction on the GAMS non-paper could not be agreed but there was agreement to in principle provide aligned comments to the Govts/authorities on the main elements of the non-paper
Consensus that the agreement should focus on tariff free treatment of products meeting the MCO definition rather products falling under a list of HS headings.
For further discussion: should the definition be as broad as possible in scope to maximize free trade in semiconductors?
JSTC 24 February MCO Status report to JSTC

9. JSTC Actions - proposal
Each association to provide feedback to their Government/authorities on the GAMS non-paper on MCO as well as on the need to confirm that an appropriate channel of communication is established with the Chinese Government
Once other GAMS members send non-paper to Chinese GAMS representatives in time, through this appropriate official channel, SIA in China will give its comments on Non-paper to meet the deadline of April 1st.
Associations to work with their GAMS members in order to clarify that the customs officials are working under the GAMS to fulfill the action item in the Chairman’s summary of the GAMS meeting that GAMS members “consult their customs experts without delay to start to develop and finalize preferably before April 2011 a definition of what constitutes multicomponent (MCO) products.”
Each association to look at outstanding issues arising from the GAMS non-paper circulated on January 25, 2011
Each association to share with JSTC any comments and position when appropriate/possible
JSTC to send a letter appreciating the progress achieved so far by GAMS and their customs and expecting the successful conclusion of their work.
JSTC 24 February MCO Status report to JSTC