China has agreed to consult with the United States on the
alleged discriminatory value-added tax on chips, the Ministry of Commerce said
in Beijing Friday.
The message has been sent to the US side via the Chinese
delegation to the World Trade Organization, the ministry said. The
two sides will decide the detailed arrangements of the consultation
after negotiation.
The US administration called China's tax policy on chips
"discriminative" to US chip manufacturers, and requested
consultation with China at the WTO last Thursday.
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 claimed
that is discriminatory to foreign firms.
According to WTO rules, China and the United States will have 60
days for consultation, and a further dispute settlement procedure
will be launched if the two sides failed to reach an agreement.
China is a leading semiconductor market for the United States.
US statistics show that US manufacturers sold up to US$ 2 billion
worth of chips last year.
(Xinhua News Agency March 27, 2004)