15 September 2008

China appeals car-parts ruling

This article is excerpted from the 15 September 2008 edition of “The Journal of Commerce”.

China appealed a World Trade Organization ruling that its tariffs for imports of auto parts violates global rules.

The Geneva-based trade body ruled on July 18 that China is breaking international rules by requiring foreign automakers operating there to buy most components from local suppliers or face higher tariffs. …

China said today it "cannot fully agree with the legal explanations and verdict of the expert panel,' Bloomberg reported.

The appeal documents are expected to be made public Tuesday.

The ruling followed a complaint filed in March 2006 by the European Union, the United States and Canada, after China compelled Ford Motor Co., Volkswagen AG, and other automakers operating on the mainland to use more local components. …

If China's appeal fails, it may face retaliatory tariffs on its exports….

In April 2005, China began levying tariffs of 25 percent on auto parts based on the amount of imports in the complete vehicle. A tariff of 10 percent tariff is usually applied to parts. Under the rules, cars that are manufactured in China must contain at least 40 percent Chinese-made parts or they are taxed at the rate of imported finished vehicles.

The U.S., EU and Canada argued that the different tariffs were discriminatory, and violated global trade rules. …