| US government files WTO trade case against China |
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| 2004/03/19 |
The US government announced on Thursday that it was filing its first trade case against China before the World Trade Organization (WTO), charging that China is using its tax code to unfairly discriminate against American semiconductor manufacturers.
US Trade Representative Robert Zoellick announced the trade complaint, contending that China is violating WTO rules against discriminatory treatment by providing a preferential tax rate for integrated computer circuits produced in China that is much lower than the tax paid by US and other foreign companies.
"US manufacturers of semiconductors and other products have a right to compete on a level playing field with Chinese firms," Zoellick said.
The US notice will begin a 60-day consultation period in which the two sides can seek to resolve the issue through negotiations. If that fails, US government can proceed with a case before a WTO dispute panel.
The US case was the first against China since it joined the WTO in December 2001. It followed criticism by Democratic presidential candidate John Kerry that President Bush's administration has not done enough to enforce the commitments China made when it was admitted to the trade body.
US Senate Finance Committee Chairman Charles Grassley said the trade complaint signaled that Washington's two-year "honeymoon" with China since it joined the WTO was over.
"The message here is simple. China has to comply with its international trade obligations," the top Iowa Republican said. The House of Representative's Democratic watchdog on trade described the action as long overdue.
"One case brought as a political talking point does not make up for the administration's failure to develop a China trade policy over the past three years while ... the US has lost almost 3 million manufacturing jobs," said Representative Sander Levin, a Michigan Democrat.
American semiconductor companies complain that China gives its domestic producers an unfair advantage in the $19 billion Chinese semiconductor market, by providing big rebates on a 17 percent value-added tax.
Last year, American companies exported $2.02 billion worth of semiconductors to China and paid about $344 million in value-added taxes. US claims that Chinese semiconductor companies receiving a tax rebate of about 80 percent, had an effective tax rate of as little as 3 percent, US officials said. |
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