Top Biz News

Nation agrees to hold talks on auto parts

By Jiang Wei (China Daily)
Updated: 2006-04-10 05:38

China has agreed to hold consultations with the United States and the European Union (EU) over import tariffs on auto spare parts, according to the Ministry of Commerce.

The US and the EU jointly filed a complaint on March 30 with the World Trade Organization (WTO), accusing China of violating its commitment to the WTO by imposing a discriminatory tariff regime on foreign car parts.

Sun Zhenyu, China's commissioner to the World Trade Organization, has informed his US and EU counterparts that Beijing has accepted their request to participate in consultations, the ministry said in a statement published on its website on Saturday.

"The time and place still have to be decided," the statement said.

The US and EU response was not available last night.

China is scheduled to lower tariffs on whole vehicles and spare parts to around 25 per cent and 10 per cent respectively by July this year in line with its commitments to the WTO.

However, according to a regulation on the imports of vehicles implemented since last April, China applies tariffs for "whole vehicles" on the import of spare parts making up 60 per cent or more of the value of a vehicle.

Major US and EU automakers said the regulation hinders their access to China, one of the world's largest and fast-growing auto markets.

The United States and the EU claimed, in the joint complaint with the WTO, that China's rules contravene its WTO obligations not to impose obligatory "local content" rules because to avoid the "whole car" tariff rates, a car-maker has to source at least 40 per cent spare parts by value in China.

According to the WTO regulations, the two sides shall start consultations within 30 days.

In case an agreement is not reached in the next 60 days, the EU and the US have the option of requesting a WTO panel to hear and rule on the dispute. Such WTO disputes usually take two to three years to resolve.

China's regulations do not violate WTO rules on origin, which calculate the origin with added-value, said Mei Xinyu, a trade expert with the Chinese Academy of International Trade and Economic Co-operation, a think tank with the Ministry of Commerce.

"Although the WTO prohibits obligatory rules on the proportion of imported products, it does not ban certain tariffs," he said.

China's imports of vehicles and spare parts were valued at US$13.6 billion last year.

This is the first time China has faced a dispute with the EU at the WTO and the second time with the United States the first being on semiconductors.

The case is one among several disputes between China and the United States before President Hu Jintao's visit to the country, including intellectual property rights, the trade surplus and the yuan rate.

(China Daily 04/10/2006 page1)