China to eliminate tarrifs

02/01/1998

China to eliminate tariffs

China may become the 40th country to join the Information Technology Agreement (ITA) and eliminate tariffs on information technology products, according to Chinese President Jiang Zemin during his recent visit to the US, but details about the proposed tariff-eliminating action will likely remain sketchy for several months.

Specifically, it is unclear exactly when China plans to begin reducing its tariffs, which range from six to 12% for semiconductors and as high as 35% on semiconductor capital equipment, according to the Semiconductor Industry Association (SIA). It is also unclear which products will be on the list for tariff elimination. A spokesman for the SIA said China`s agreement to sign the ITA is progress "at a first blush impression," but that a specific plan offering details will be "the proof of the pudding."

Under the ITA, 39 countries, including South Korea, the European Union, the US, Japan, Malaysia, and Thailand, have agreed to eliminate tariffs on information technology products, including wafer fab equipment and materials by the year 2000, though in some cases the tariff elimination has been extended until 2005.

"China`s elimination of tariffs on information technology products, including semiconductors, marks a major step forward in the integration of China into the world economy," said SIA chairman Jerry Sanders.

The elimination of tariffs is a key prerequisite to joining the World Semiconductor Council, which met for the first time earlier this year to find ways to break down trade barriers. But for China, other issues must also be resolved. Taiwan, which has been struggling for independence from China, is also seeking membership into the Council. The SIA spokesman said the Council will look for some political direction, perhaps from the US government, regarding Taiwan and China before resolving the membership questions. "We want Taiwan in, but we also want China in, too," he said.- C.L.