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China, US to sign MOU on semiconductor
Updated: 2004-07-10 11:43

China and the United States will sign a Memorandum of Understanding (MOU) on the value-added tax of semiconductors in the near future, a spokesman with China's Ministry of Commerce (MOC) said Friday.

MOC Spokesman Chong Quan said in a statement that China and the United States held the fourth round of negotiations on the issue of value-added tax on semiconductors from July 1 to 2, and the two sides reached compromise on July 2.

The US administration accused China's tax policy on semiconductors as being "discriminatory" to US chip manufacturers, and requested consultation with China at the World Trade Organization on March 18.

China levies a 17 per cent value-added tax on imported chips. Domestic producers also are subject to the tax but qualify for rebates of as much as 14 per cent. 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 is a leading semiconductor market for the United States.

US statistics show that last year US exports of semiconductors to China totaled two billion US dollars.

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