Eager to open the fastest-growing chip market further, a semiconductor trade group is scolding China for what it calls a discriminatory tax policy.

The World Semiconductor Council, a conglomeration of industry organizations such as the U.S. Semiconductor Industry Association (SIA), this week urged China to open its market fully to all foreign semiconductor products by reforming what is known in the industry as a "value added" tax policy.

According to the SIA, China's tax policy in question discriminates against foreign products by applying a 17 percent tax on sales of all imported and domestically produced semiconductors and integrated circuits, but offering a rebate for domestic products. Because of the rebate, integrated circuits manufactured within China face a value-added tax rate of 6 percent, while integrated circuit designs developed in the country face a value-added tax rate of 3 percent, according to the association.

"China made great strides in opening its market as part of its WTO (World Trade Organization) accession, but the discriminatory application of the value-added tax negates the benefits it promised to provide when it joined the WTO," SIA President George Scalise said in a statement Thursday. "The semiconductor industry is calling on China to honor its WTO commitments by eliminating the discriminatory value-added tax on all semiconductors, which will also help China by lowering the cost of access to information technology goods for its consumers."

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