Japan Said To Be Mulling Official Complaint Against Chinese Semiconductor Tax

by Mary Swire, Tax-News.com, Hong Kong

06 April 2004

Japan is considering whether to launch an official complaint before the World Trade Organisation protesting China’s tax policy in the semiconductor industry, which is said to discriminate against foreign imports, the FT reports.

Japan has already expressed an interest in supporting the American-led complaint against the Chinese as a third party nation. This would allow it to take part in the consultation phase of the proceedings.

However, Shoichi Nakagawa, Japan's economy and trade minister, when asked in an interview with the Financial Times whether the Japanese would be prepared to escalate their action into a formal complaint, replied: “There is certainly that possibility, yes.”

“China is in violation of WTO rules and what we are seeking is a right that is given us under those rules," he explained.

Whilst trade officials have indicated that the minister is merely looking to fire a warning shot across the bows of the Chinese government, it is thought that Japan will be more likely to raise its action to an official complaint if its application as a third country is rejected.

The European Union has also expressed an interest in contributing to the dispute as a third party, fearing that China may extend VAT breaks to other products at the expense of European competitors.

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