Wednesday, March 17, 2004

For once, the administration manages to 1) support free trade, and 2) do so in a politically savvy manor.
The US is set to launch its first World Trade Organisation complaint against China, charging that Beijing is violating global trade rules by offering big tax breaks for domestic semiconductor producers.
At issue is a 17 per cent value-added tax that China imposes on all semiconductors. The Chinese government rebates all but 3 to 6 per cent of that tax for domestic producers but retains the full tax on imports, giving domestic chipmakers a huge advantage in an industry with narrow profit margins.
This is the stuff we should have been doing all along, trying to open foreign markets, as opposed to sporadically closing ours based on cynical electoral calculations.

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