The deadline for the US and Japanese governments to reach an agreement on semiconductor tariffs and production came and went last week without any resolution.
Both sides attempted to thrash out a deal up to the eleventh hour on 31 July, but it remained unclear what impact the failure will have on the computer industry and relations between the countries.
Europe could find itself the piggy-in-the-middle if the dispute continues.
Last June, US president Bill Clinton and Japanese prime minister Ryutaro Hashimoto agreed to set the deadline for the end of July. The dispute over chips centres on an agreement which the US forced on Japan in 1991.
Under that deal, Japan had to buy at least 20 per cent of semiconductors from outside its own boundaries. Japan is quick to point out that it already buys 30 per cent of chips from foreign countries.
Representatives for the Japanese government say that, in itself, means there is no point ratifying a new and similar agreement. But the US is understood to be concerned that eventually Japan would revert to buying its own kit if liberated from a formal agreement.
The Japanese have suggested to the US government that because semiconductors are now a worldwide concern, it would be in everyone's interests to have a global organisation that would draw South Korea and Europe to the same round table.
The stand-off could have bigger implications for the world economy than just semiconductors. Internal feeling in the US against the success of Japanese trade in all spheres remains high.
The European Union continues to lobby strongly for a part in the chip discussions as it has a large chunk of the $250 million business.
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