WTO condemns China for first time
GENEVA (AP) - February 13, 2008 The WTO found that China was breaking trade rules by taxing
imports of auto parts at the same rate as foreign-made finished
cars, according to a copy of the ruling's conclusions obtained by
The Associated Press.
In the sweeping decision, the three-member WTO panel found
against China on nearly every point of contention with the U.S.,
the 27-nation EU and Canada.
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.
The ruling, to be officially released in March, will be closely
watched by makers of batteries and brakes to seats and spark plugs
on both sides of the Atlantic, including U.S.-based Delphi Corp.,
General Motors' former parts supplier, and Robert Bosch GmbH in
Germany.
The decision is officially only an "interim ruling." But no
panel has ever changed its findings between interim and final
decision.
China, which will still be able to appeal, claims the tariffs
are intended to stop whole cars being imported in large chunks,
allowing companies to avoid the higher tariff rates for finished
cars. It argues that all measures are fully consistent with WTO
rules and do not discriminate against foreign auto parts.
But the U.S. and the EU say that China promised not to treat
parts as whole cars when it joined the WTO in 2001.
Key officials have said they believe the case has ramifications
beyond the auto industry.
"It will be instructive to see how China responds," U.S. Trade
Representative Susan Schwab said in a recent interview. "If, as we
hope and expect, China will be found in contravention of its WTO
obligations, hopefully that will help those forces within China
that have been advocating reform."
WTO cases tend to take years before retaliatory sanctions can be
authorized. After the ruling is released, Beijing will be given a
"reasonable period of time" to make legislative changes. A
separate panel would then have to find that Beijing was still
breaking the rules.