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U.S. High-Tech Industry Coalition on China
- American Electronics Association - Business Software Alliance -
- Computer Systems Policy Project - Computing Technology Industry Association -
- Electronic Industries Alliance - Information Technology Industry Council -
- Semiconductor Industry Association - Semiconductor Equipment & Materials International -
- Software & Information Industry Association - Telecommunications Industry Association -
- United States Information Technology Office -

Benefits to the American Semiconductor Industry
of
Permanent Normal Trade Relations with China

Semiconductor Industry Facts

China is a critical market for the success and growth of America’s high-technology industries.

The current semiconductor market in China is estimated to be up to $8 billion per year. Some analysts expect it to become the third largest semiconductor market by 2001 and the second largest by 2010.

The current semiconductor equipment and materials market in China is estimated to be over $1 billion per year and is projected to reach almost $4 billion in 2003.

Why PNTR with China is Important

Congress should extend permanent normal trade relations (PNTR) to China in order for U.S. semiconductor companies and semiconductor equipment and materials (SEM) manufacturers to benefit from China’s accession to the World Trade Organization (WTO).
Permanent NTR is necessary for U.S. companies to reap the benefit of China’s WTO membership. Without it, China and the United States would not be required to apply WTO commitments to each other. Our foreign competitors would benefit from the hard-won concessions negotiated by the United States, with U.S. companies and their workers left on the sidelines.
The U.S.-China bilateral agreement on China’s WTO accession is a solid win for the semiconductor and SEM industries. The agreement achieves all priority objectives:
Tariffs: Semiconductor tariffs, currently 6-10%, would be eliminated by 2002. Semiconductor equipment and materials tariffs, some of which are currently on the books as high as 35%, would be eliminated by 2005.
Trading and Distribution Rights: China would grant trading and distribution rights to foreign companies. This would allow direct contacts with end-users, decrease costs and improve service, inventory and delivery.
State-Owned Enterprises: China has agreed that all state-owned and state–invested enterprises will make purchasing decisions on commercial considerations only. These enterprises comprise a significant portion of the Chinese electronics industry and this provision prevents discrimination against U.S. companies.
Intellectual Property Rights: China has agreed to join the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPs) immediately upon accession with no transition period.
Technology Transfer and Investment Restrictions: China would implement the WTO Agreement on Trade-Related Investment Measures (TRIMs), eliminate export performance and local content requirements on foreign investors and would not condition investment or import approvals on performance requirements.
Antidumping Provisions: The U.S. and China have agreed that the U.S. will maintain the ability to use its current non-market economy antidumping methodology for fifteen years. This provision is important given the high level of state involvement in the Chinese electronics sector.

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