Analyze de following dispute settleman, give a summary, and stablish: Positions

Question

Analyze de following dispute settleman, give a summary, and stablish:
Positions of the parties
Issue before the court
Outcome Please
see the link for full setlement: https://www.wto.org/english/tratop_e/dispu_e/cases_e/ds309_e.htm

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.

Explanation / Answer

The US requested consultations with China with wto framework regarding the issue ofChina giving preferential treatment to its domestic producers of integrated chips. This puts USA exports of integrated chips at disadvantage in Chinese market compared to Chinese domestic producers of integrated chips. The issue is also of China favouring some member over other members by providing partial refund of vat (in reality these chips are designed in China and produced in one member country) and discriminating against services and service suppliers of other members

The issue before court is violation of article 1 and 3rd of GATT 1994

The outcome was mutual agreement by which China will not favour domestic producers of I/c chips by providing partial refund of VAT and China will not favour imports of i/c designed in China but imported from one member.

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