China has a legitimate right to impose higher tariff rates on imported whole
vehicles, said Ministry of Commerce spokesman Chong Quan on Friday.
WTO panel to probe China's auto parts
imports
He also expressed regret over the request from the European Union, the United
States and Canada to set up a World Trade Organization (WTO) dispute settlement
panel concerning the import of auto parts.
A man stands in a car dealership in
Shanghai in this March 10, 2006 file photo. The WTO decided on Thursday to
set up a panel to investigate into the complaints of the US and EU on
China's import duties on auto parts. [Reuters]
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China's
regulations on the import of auto parts aim to prevent tax evasion by companies
who import whole cars in separate parts and reassemble them to avoid higher
tariffs, said Chong.
He said the regulations, designed to crack down on illegal assembly, protect
the interest of customers and comply with WTO rules.
The regulations also comply with the commitments China made to the WTO when
it was admitted to the world trade body, he said.
China has shown "great sincerity" in clarifying the facts and its views
during consultations with the EU, the United States and Canada, said Chong.
Since China joined the WTO in 2001, the spokesman said, the country has
opened a number of different sectors and taken measures to lower or abolish
tariffs and offer greater market access to other WTO member nations.
The tariffs for imported whole vehicles were reduced from 80 percent in 2001
to the current 25 percent, and tariffs on auto parts dropped from 30 percent to
10 percent, Chong added.
He emphasized that China has also abolished its quota and licensing systems.
"Taken together, these facts show China is serious in implementing its
obligations to WTO and observing WTO rules," he concluded.
Under Chinese rules, the tariffs for "whole vehicles" also apply to the
import of spare parts that make up 60 percent or more of the value of a finished
vehicle.
To avoid "whole car" tariff rates, a car-maker has to source 40 percent or
more of its spare parts by value from China.
In a complaint filed at the WTO at the end of March, the European Union and
the United States claimed that China was imposing a discriminatory tariff regime
on foreign car parts. Canada joined them several days later.
The two sides held negotiations on this issue, but the three powers requested
that the WTO to establish the panel after the talks failed to make any progress.
"These measures discourage auto manufacturers in China from using imported
parts in the assembly of new vehicles," US trade negotiator David Shark told the
WTO's dispute settlement body, claiming that the practice could not be justified
under the global trade body's rules.
But commerce ministry spokesman Chong said China had showed great sincerity
in seeking to resolve the issue through negotiations with the three economies.
This is China's first WTO dispute to reach the panel stage. A case brought by
the United States against China's duties on semi-conductors was solved through
consultations. Such a WTO investigation could last for years before a final
judgment is reached.
Several countries, such as Australia, Japan, Mexico and Argentina, have
signed up to the auto parts panel as interested third parties.
Overseas automakers have invested heavily in China to set up vehicle parts
joint ventures.
China imported vehicles and spare parts worth US$13.6 billion last year.
The European Commission argues that this may contravene China's WTO
obligations not to impose obligatory "local content" rules.
