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Auto parts dispute may still end before WTO
2006-09-15
Shanghai Daily
The United States, Canada and the European Union are still planning to file a joint complaint with the World Trade Organization against China's import tariffs on auto parts despite China setting a two-year transitional period.
The complaint is expected to be filed as early as this week, according to the Wall Street Journal yesterday, citing people familiar with the matter.
This marks an accelerated tariff dispute among the four parties after they failed to reach agreement in several talks held between April and June.
It is also the first trade dispute in the auto industry between the West and China.
China levies 25 percent tariff on imported auto parts if they comprise over 60 percent of the value of a car, the same tariff as on completed new cars, or complete knocked-down parts and semi knocked-down parts. Spare parts that do not comprise over 60 percent of the value of the car will incur 10 percent tariff.
The rule, which was introduced last year, was seen as a violation of WTO trade rules by the West which say foreign carmakers will be forced to source from domestic parts suppliers.
An official from the Ministry of Commerce's WTO division said the related Chinese WTO panel has not received any formal document and China would take active measures to handle the complaint.
"Both parties could call on the WTO panel to hear the dispute, which could last for one and a half years to reach a final report," he said.
The Wall Street Journal also said China refused to change its policy and the complaint would lead to punitive special tariffs being imposed on Beijing.
In July, China postponed the date on which a higher tax would be imposed on certain imported auto parts until July 1, 2008.
Michael Jennings, the EU's Beijing-based spokesman, responded yesterday that both the EU and China have made a compromise on the dispute, but they are still not enough.
"Such conflict is normal during bilateral trade," said Zhang Boshun, secretary of the China Association of Automobile Manufacturers Market and Trade Commission.
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