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Last Updated: Thursday, 18 March, 2004, 17:31 GMT
US lashes China over chip trade
China is facing a complaint at the World Trade Organisation for the first time since its joined in early 2002.

The complaint comes from the US, and represents a further intensification of Washington DC's accusation that China's trade policy is costing US jobs.

The WTO case concerns tax breaks for Chinese semiconductor makers, which the US says gives them an unfair advantage.

US trade chief Robert Zoellick said China "must live up to its obligations" to create a "level playing field".

The move follows recent efforts by lawmakers on both sides of US politics - as well as unions - to blame China for some of the stubborn stream of job losses.

Opening salvo

By filing the case, the US has become the first of the WTO's 146 members to level charges against China.

The filing kicks off a 60-day consultation, after which - if Washington is not satisfied - a panel can be convened to determine whether the tax breaks fall foul of WTO rules.

The problem, from the US's point of view, is that China remits 80% of value-added tax back to domestic chipmakers - but not to foreign suppliers.

That, US chipmakers say, gives them a price advantage of as much as 15%.

The BBC's Stephen Evans
"The heat is now being turned up on China"

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