China studying consultation request over chip row

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Last updated at: (Beijing Time) Tuesday, April 06, 2004

China studying consultation request over chip row

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China is studying the request of the European Union and Japan to join the United States in the consultations over China's tax policy on semiconductors, an official with the Ministry of Commerce said here Monday.

The EU asked for the consultation on March 26 and Japan on March 31, joining the United States to complain against China's value-added tax on semiconductors.

China agreed to consult with the United States on March 26 after the United States officially requested the consultation on March 18. The two sides are working on the timing and venue of the consultation through negotiation, according to the official, who refused to be identified.

The US administration called China's tax policy on chips "discriminative" to US chip manufacturers. China levies a 17 percent value-added tax on imported chips. Domestic producers also are subject to the tax but qualify for rebates of as much as 14 percent.

Some US manufacturers have claimed that is discriminatory to foreign firms.

China and the United States will have 60 days for consultation and, according to the rules of World Trade Organization, a further dispute settlement procedure will be launched if the two sides fail to reach an agreement within the 60-day time limit.

China is a leading semiconductor market for the United States. US statistics show that US manufacturers sold up to 2 billion US dollars worth of chips last year.

Source: Xinhua

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