China agreed to talks with the US on tax breaks for Chinese chipmakers that a Bush administration complaint to the WTO claims put US companies at an unfair disadvantage.
The government has "accepted the US demand and agreed to hold discussion on the issue of drawing back the semiconductor value-added tax," the Ministry of Commerce said on its Web site on Friday. The time and place have yet to be decided, it said.
The ministry on March 20 criticized the US for filing the complaint, the first by a nation against China in the WTO, saying it would undermine bilateral negotiations to resolve the dispute. The US action followed a year of pressure from a group representing Intel Corp, Micron Technology Inc and other US chip companies.
The US says that China refunds as much as 14 percentage points of a 17 percent value-added tax on chips designed and made in China. The country charges the full 17 percent on imports, costing US exporters US$344 million last year, the US says.
Under WTO rules for resolving disputes, the US and China must hold consultations for at least two months before a panel will begin to adjudicate the complaint.
China sent a letter to the US on Friday through Chinese representatives to the WTO, the Ministry of Commerce said.
Vice Premier Wu Yi (
China, which joined the 146-nation WTO in December 2001, is the world's third-largest and fastest-growing chip market.
Semiconductors are the second-largest US export to China and China's No. 1 import, according to the San Jose, California-based Semiconductor Industry Association, which says it represents 85 percent of the US industry. The US exported US$2 billion of integrated circuits to China last year, the US trade office said.
China's chip market was worth US$19.2 billion last year and will expand 41 percent this year, according to San Jose-based Semiconductor Equipment and Materials International.
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