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Higher auto parts tariffs delayed
(Shanghai Daily)
Updated: 2006-08-04 15:18
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The plan now won't go into effect until July 1, 2008.
The tariff rates - as high as 28 percent - drew complaints from the EU and US, who said they would force carmakers to source more from China.
China insisted the rules were aimed at curbing tax evasion.
The new announcement came after the second round of negotiations between the three parties.
"This may be considered a temporary compromise by the Chinese government with the basic principles still intact," said Zhang Boshun, general secretary of the China Association of Automobile Manufacturers Market and Trade Commission.
"The extended period will create a win-win situation for both parties and help luxury carmakers including Mercedes-Benz, BMW and Volvo to deepen localization."
The EU and US could turn the tariff conflict to the World Trade Organization for arbitration if no agreement is finally reached.
According to the postponed rules, imported car components consisting of more than 60 percent of the value of a car would be hit with a tariff of 28 percent, the same tariff as on completed new cars.
Otherwise the spare parts would be charged 10 to 14 percent.
Michael Jennings, EU's Beijing-based spokesman, refused to comment on whether the announcement was part of the negotiations, while Zhong Na, the Chinese spokesman of the EU's China office said another round of talks were scheduled for next month.
Although luxury carmakers have found it difficult to look for domestic suppliers due to small production capacities, most of them have stepped up localization measures to trim costs in the competitive Chinese market.
BMW Group, which produces the 3 Series and 5 Series in China, said earlier it would triple the amount of auto parts it sources from the Chinese market from 870 million yuan (US$108.75 million) last year to 3 billion yuan by next year.