China seeks WTO review of chip export restrictions led by US

Chinese representative says US, Japan and Netherlands may have ‘violated’ trade body’s principles, according to state television
Beijing also calls for the WTO to be notified if there is a deal between the countries to limit China’s access to chip-making equipment

US-China relations

Cyril Ip

Published: 6:15pm, 5 Apr 2023

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Beijing has called on the World Trade Organization to review restrictions on chip exports to China by the US, Japan and the Netherlands, saying they may have “violated” the trade body’s principles, according to state media.

China questioned the three countries over the existence of a deal seeking to limit its access to chip-making equipment during a two-day meeting of the WTO’s Council for Trade in Goods in Geneva that concluded on Tuesday.

“Does the agreement exist? If so, should WTO members be notified and should it be reviewed by WTO members?” a Chinese representative asked, adding that no official details had been released, state broadcaster CCTV reported.

How US-Japan-Netherlands pact on chip tech exports may play out in China

The possible deal first emerged in a January statement from Dutch firm ASML, which dominates the market for one-of-a-kind, cutting-edge chip-making equipment. It said an agreement was not finalised but would cover advanced chip manufacturing technology “including but not limited to advanced lithography tools”.

Asked by reporters about the deal in March, Dutch Foreign Trade Minister Liesje Schreinemacher said the “details still need to be worked out”.

The Dutch government has been under pressure to align with a US goal to undermine China’s ability to make cutting-edge chips, and early last month said it would restrict exports of the country’s “most advanced” chip technology. That will include ASML’s extreme ultraviolet lithography (EUV) systems, making it almost impossible for China to develop the sub-5-nm chips that are used in central processors.

Last week Japan also said it would impose export controls on 23 types of leading-edge technology supplied by major companies including Tokyo Electron. It came after months of lobbying from the US, which imposed sweeping export restrictions on high-end semiconductors and chip-making tools in October.

According to the CCTV report, China’s representative told the Council for Trade in Goods that Beijing believes there is an agreement that “violates the principle of openness and transparency of the WTO and undermines the authority and effectiveness of WTO rules”.

“[China] demands the US, Japan and the Netherlands notify the WTO of the agreement and subsequent measures and calls on the WTO to strengthen supervision on the enforcement of these measures.”

ASML chief executive Peter Wennink met Commerce Minister Wang Wentao during a visit to China last week. Wang told Wennink that Beijing wanted to create an accommodating business environment for foreign companies like ASML, which he said could help safeguard stability in the global semiconductor supply chain, according to a ministry statement.

China accounted for 14 per cent of ASML’s sales in 2022 and it has sold more than €8 billion (US$8.7 billion) worth of chip lithography equipment in China over the past decade.

In November, the Netherlands had voiced opposition to US attempts to cut off China from semiconductor technology, pledging to defend its economic interests.

“It is important that we defend our own interests – our national safety, but also our economic interests,” Schreinemacher said at the time. “If we put that in an EU basket and negotiate with the US and in the end it turns out we give away deep ultraviolet lithography machines to the US, we are worse off.”