US asks China to promptly comply with WTO ruling

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China loses appeal against WTO car parts ruling
China on Monday 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. The 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." United States Trade Representative Susan Schwab also called on China to comply with the ruling. "Especially in light of the current problems faced by the US auto industry, I expect China to comply promptly with its WTO obligations by removing an unlawful and unfair trade barrier that is harming US workers and manufacturers," said Schwab in a statement. Beijing has a minimum local content requirement of 60 percent 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 percent on whole vehicles and only 10 percent 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 US 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.

by Staff Writers
Washington (AFP) Dec 15, 2008
The United States asked China Monday to comply promptly with a WTO ruling that Beijing's tariffs on car part imports fell foul of global trade rules.

US Trade Representative Susan Schwab said the ruling by the Geneva-based global trade watchdog confirmed that China's treatment of US and other imported auto parts was "inconsistent" with its WTO obligations.

China lost an appeal against a WTO ruling that its tariffs on car part imports violated global trade rules, the WTO appeal panel said Monday.

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.

"Today the WTO Appellate Body confirmed that China's discriminatory taxation of US auto parts is fundamentally at odds with core WTO principles," Schwab said.

"Especially in light of the current problems faced by the US auto industry, I expect China to comply promptly with its WTO obligations by removing an unlawful and unfair trade barrier that is harming US workers and manufacturers," she said in a statement.

Key US automakers are on the brink of bankruptcy amid financial chaos that has sharply eroded economic growth in the world's most developed nation.

Auto giant General Motors has pleaded for government help and warned it will run out of cash by the end of this month without intervention. Chrysler and Ford have also asked for federal aid to stay afloat.

"International trade must be a two-way street," Schwab said Monday.

"Both the United States and China benefit from our trade relationship, but as this dispute makes clear, when China adopts measures that unfairly restrict US exports, we will not hesitate to use all available tools to ensure that China complies with the rules of the international trading system," she said.

Schwab said that the United States had to drag the auto parts case to the WTO as China failed to respond to efforts to resolve it through dialogue.

Increasing access to China's auto market was a key issue in China's accession to the WTO, and China agreed to lower its trade barriers affecting the importation of autos and auto parts.

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