November 20, 2008

WTO rules against China over auto parts dispute

Xinua reported that World Trade Organization last week ruled against China over its auto parts dispute with the United States, the European Union and Canada. The formal verdict, released by a WTO expert panel, maintained an interim ruling delivered in February.

It largely upheld US, EU, and Canadian complaints that Chinese tax measures on imported auto parts violated WTO rules.

China considers auto parts as a complete vehicle if they account for 60%t or more of the value of a final vehicle and charges a higher tariff on them. Chinese trade officials said the measure is meant to keep lawbreakers from exploiting the differences between tariff rates for importing entire automobiles and auto parts and to protect consumer interests.

However, the three complainants argue that the Chinese tax measure deters auto makers from using imported parts to build cars in the country, which costs jobs abroad.

This is the first time that the WTO has ruled against China in a trade dispute.

China still has the right to appeal.