AeA Praises USTR for US-CHINA Agreement on PRC Value Added Tax

Washington - July 8, 2004 - AeA, the nation’s largest high-tech trade association, today expressed strong support for a proposed settlement of a complaint filed at the World Trade Organization (WTO) regarding China’s value added tax (VAT) on semiconductors.

"The importance of today's announcement is two-fold for the high-tech industry,” said William T. Archey, President and CEO of AeA.  “First, it will bring this particular tax regime into compliance with WTO obligations, as it is critical that the country with the fastest growing tech sector abide by those obligations. 

“Second, and more broadly, with the rapid evolution in recent years in both China's economy and economic policy, it is inevitable that China might occasionally adopt policies aimed at conferring special benefits on domestic production.  When that occurs, it is important that every attempt be made to bring such a large and important trading partner back into compliance with international obligations.  That's exactly what the SIA petition and Ambassador Zoellick and his team have successfully accomplished.

“We are pleased with China’s agreement to eliminate these provisions and would like to recognize Ambassador Zoellick and his colleagues for their efforts,” he continued.

Under the agreement, China will eliminate the discriminatory features of its VAT so that all semiconductor products are taxed equally regardless of origin. The settlement agreement will be filed with the World Trade Organization in Geneva next week. The complaint was filed by the United States Trade Representative (USTR) in March of this year.

At present, China imposes a value added tax of 17 percent on sales of all imported and domestically produced semiconductors but rebates the amount of the VAT burden in excess of 3 percent for semiconductors produced and sold in China. Under the agreement, the VAT rate will be 17 percent on all semiconductors regardless of origin.

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Advancing the business of technology, AeA is the nation's largest high-tech trade association. AeA represents more than 3,000 companies with 1.8 million employees. These 3000+ companies span the high-technology spectrum, from software, semiconductors, medical devices and computers to Internet technology, advanced electronics and telecommunications systems and services. With 17 regional U.S. councils and offices in Brussels and Beijing, AeA offers a unique global policy grassroots capability and a wide portfolio of valuable business services and products for the high-tech industry. AeA has been the accepted voice of the U.S. technology community since 1943.

This page was last updated on 07/08/04.