31 August 2009

China backs down over auto part import levies

The following is excerpted from today's edition of "American Shipper".

U.S. Trade Representative Ron Kirk’s office on Friday said it expects China to eliminate discriminatory charges imposed on imported auto parts, effective Sept. 1.

China told U.S. trade officials it would publish amendments to trade law shortly. The dispute stems from the United States’ contention that Chinese laws impose charges on imported parts to be incorporated into final assembled vehicles -- charges that contravene China’s agreements to lower trade barriers according to its accession to the World Trade Organization.

In March 2006, the United States requested formal WTO consultations with China regarding the auto parts issue. The consultations failed to resolve the dispute, and in October 2006 the WTO established a dispute settlement panel. In July 2008, the WTO dispute settlement panel found that China's additional charge on imported auto parts unlawfully discriminate against U.S. auto parts. China appealed the ruling but in December 2008 the appellate body confirmed the findings of the WTO panel.

“China adopted regulations that imposed an additional charge on imported auto parts whenever the imported parts were incorporated into a final assembled vehicle that failed to meet certain local content requirements,” the USTR office said in a statement. “In particular, all vehicle manufacturers in China that used imported parts had to register with China's Customs Administration and provide specific information about each vehicle they assembled, including a list of the imported and domestic parts to be used, and the value and supplier of each part.

“If the number or value of imported parts in the assembled vehicle exceeded specified thresholds, the Chinese authorities assessed a 25 percent tax on each of the imported parts. These charges unfairly discriminated against the use of imported parts in the assembly process and discouraged automobile manufacturers in China from using imported auto parts in the assembly of vehicles. The charges also put significant pressure on foreign auto parts producers to relocate manufacturing facilities to China.”

Kirk said he was happy to see China agree to the changes and that his office would be reviewing them carefully....