US Calls On WTO To Settle Dispute With China Over Auto Parts

by Glen Shapiro, LawAndTax-News.com, New York

19 September 2006

United States Trade Representative Susan C. Schwab announced on Friday that the United States, the European Union and Canada will be asking the World Trade Organization (WTO) to establish a dispute settlement panel regarding China’s treatment of US auto parts.

According to an USTR statement:

"China is imposing charges that unfairly discriminate against imported auto parts and discourage automobile manufacturers in China from using imported auto parts in the assembly of vehicles. The United States believes that these charges are inconsistent with China’s WTO obligations."

"Working together with Canada and the EU, we have tried to resolve this issue through consultations as we always prefer to negotiate rather than litigate, but China has demonstrated no willingness to remove its unfair charges," Ambassador Schwab added.

"While we remain open to settling this dispute, China’s current stance leaves us no choice but to proceed with our WTO case. We are committed to providing a level playing field for US exporters to China and, as we have made clear, we will not hesitate to pursue dispute settlement if necessary."

The United States initiated the case on March 30, 2006, by requesting formal WTO consultations.

Increasing access to China’s auto market was a key issue in China’s accession to the WTO. Although China’s WTO commitments limit its tariff on imported auto parts to a rate that is significantly below China’s tariff on finished vehicles, China’s regulations impose a charge on imported auto parts equal to the tariff on complete automobiles, if the parts are incorporated into a final assembled vehicle that fails to meet certain local content requirements.

The United States and its supporters in this matter feel that these higher charges unfairly discriminate against the use of imported parts in the assembly process.

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