China Appeals Auto Parts Ruling, First WTO Loss
16 September 2008
China on Monday appealed its first legal defeat at the World Trade Organization, a ruling in favor of the United States, European union and Canada in a dispute over car parts.
The WTO said in a statement that it was canceling Monday's meeting of its dispute body scheduled for adopting July's sweeping decision against Beijing. The commerce body said the case had been appealed, but did not immediately make documents available.
The WTO's three-member panel ruled against China on nearly every point of contention with the U.S., the 27-nation EU and Canada, which argued that Beijing was breaking trade rules by taxing imports of auto parts at the same rate as foreign-made finished cars.
The panel found that Chinese measures "accord imported auto parts less favorable treatment than like domestic auto parts" or "subject imported auto parts to an internal charge in excess of that applied to like domestic auto parts." It told the Asian country to bring its tariffs into compliance with international trade rules.
Beijing said at the time it disagreed with the verdict and repeated its claim that the taxes were needed to stop whole cars being imported in large chunks, allowing companies to avoid the higher tariff rates for finished cars.
Under the rules, cars made in China must contain at least 40 percent Chinese-made parts or they are taxed at the rate of imported finished cars.
The three trade powers argued that the tariff was discouraging automakers from using imported car parts for the vehicles they assemble in China. As a result, car parts companies had an incentive to shift production to China, costing Americans, Canadians and Europeans their jobs, they said.
WTO cases tend to take years before retaliatory sanctions can be authorized. If China loses its appeal, it will be given a "reasonable period of time" to make legislative changes. A separate panel would then have to determine whether Beijing had come into compliance or was still breaking the rules.
China's trade boom has caused friction with Europe and the United States as their trade deficits with the Asian country have grown.
This dispute, launched in 2006, marked the first time Western allies teamed up to seek a formal WTO investigation of China's commercial practices since the Asian country joined the trade body seven years ago.
Source : english.chinabuses.com
Editor : James
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