China said Friday that the request of the United States to
consult with China within the World Trade Organization
(WTO)?is "beyond understanding," but China is studying the
request.
Spokesman Chong Quan of the Ministry of Commerce (MOC)
said in a statement that China and the United States have had
several bilateral negotiations on the issue of value-added tax on
semiconductors, and certain progress has been made.
"At a time when bilateral negotiations are still under way, the
United States suddenly requested at the WTO to consult with China
on the issue; it is totally beyond understanding," Chong Quan
said.
The spokesman said China is "making a serious study" of the US
request.
The US administration accused China's tax policy on
semiconductors "discriminatory" to US chip manufacturers, and
requested consultation with China at the WTO.
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 said it
discriminates against foreign firms.
But Chinese semiconductor industry experts said the
discrimination charge was groundless because China's rebates policy
is open to all companies willing to set up manufacturing operations
in China.
China and the United States will have 60 days for consultation,
and according to WTO rules, further dispute settlement procedures
will be started if the two sides failed to reach agreement within
the 60-day time limit.
China is a leading semiconductor market for the United States.
US statistics show that last year US exports of semiconductors to
China totaled US$2 billion.
(Xinhua News Agency March 20, 2004)