Michael C. Maibach, President & CEO

European-American Business Council
202-637-3444 ~ www.EABC.org

Washington, DC – July 9, 2004 – The European-American Business Council today applauded the announcement that it China would end its discriminatory VAT tax rebate policy for locally manufactured semiconductors. Moreover, the EABC congratulated US Trade Ambassador Robert Zoellick and EU Trade Commissioner Pascal Lamy on the US-EU collaboration that supported this successful outcome. On January 29th this year, the EABC had written to Zoellick and Lamy, asking that the two governments join efforts to address this trade issues. Two issues led to this recommendation: first, that the Chinese practice could set a dangerous precedent for all imported products, and second, it was an instance where Trans-Atlantic collaboration could be used to special advantageous for the global trade system.

Maibach comments: “The Chinese announcement that they will now conform to fundamental WTO trade principles is a victory not only for US and EU industry, but for Chinese efforts to grow their economy based on sound market forces.” The US-EU cooperation we have seen here underscores that Trans-Atlantic cooperation in the trade area can be a positive factor in overall global wealth creation. The EABC applauds the strong stand that the USTR and EU Commission have taken together to insure that China adheres to the commitments it made when it entered the WTO. Ambassador Zoellick and his great team deserve special praise as the lead negotiators on this matter.” 

Background: The Chinese 17% VAT on manufactured goods such as semiconductors had been lowered to 3% for Chinese domestic chip manufacturers. This policy constituted trade discrimination against imported products inconsistent with WTO obligations.

The EABC represents 40 major US and EU-based companies which support open markets and a rules-based trading system. “EABC members actively supported China’s entry into the WTO two years ago, and share a common desire to support a rules-based WTO trading system. If national treatment rules were allowed to be violated in this case, other instances might have followed. China is too important a market to have allowed this practice to spread to other sectors,” concluded Maibach.