China Loses Appeal Against WTO Car Parts Ruling

Ruling that tariffs on car part imports fell afoul of global trade rules is upheld

China on Dec. 16 lost an appeal against a World Trade Organization ruling that its tariffs on car part imports fell foul of global trade rules, the WTO appeal body said. The Dispute Settlement Body ruled in July that China's policies were inconsistent with WTO rules, a decision that was welcomed by the United States which brought the complaint along with Canada and the European Union.

China appealed against the ruling, but the WTO's appeal body said that it "upheld the Panel's" findings. he Appellate Body also recommended for China to "bring its measures ... into conformity with its obligations."

Welcoming the ruling, Europe's top trade official Catherine Ashton said: "China should now put an end to the discrimination and ensure a level playing field in its automotive sector."

Beijing has a minimum local content requirement of 60% for home produced cars. A vehicle that fails that criterion suffers the same tariff as if it had been imported completely built.

China imposes an import duty of 25% on whole vehicles and only 10% on auto parts.

China has said the rules aim to prevent tax evasion by companies that import whole cars as spare parts to avoid higher tariff rates. But the U.S. argued that the measure puts pressure on foreign auto parts producers to re-locate their manufacturing facilities to China and discourages car makers in China from using foreign auto parts in the assembly of vehicles.

Copyright Agence France-Presse, 2008

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