The United States first WTO case against China in 2004 was a significant step towards ensuring fair trade practices

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The United States first WTO case against China in 2004 was a significant step towards ensuring fair trade practices

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On 18 March 2004, the United States requested consultations with China concerning China’s preferential value-added tax (“VAT”) for domestically-produced or designed integrated circuits (“IC”). The United States claims that, although China provides for a 17 percent VAT on ICs, enterprises in China are entitled to a partial refund of the VAT on ICs that they have produced, resulting in a lower VAT rate on their products. In the US view, China thus appears to be subjecting imported ICs to higher taxes than applied to domestically produced ICs and to be according less favourable treatment to imported ICs.

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The United States brings its first WTO case against China.