Monday, 22 December 2008
China Loses WTO Appeal (JOC – 12/16/08)
The Appellate Body of the World Trade Organization confirmed Monday that a Chinese tax measure on imported auto parts violates the trade body's rules. In its decision, the WTO’s top court largely upheld a panel ruling in July which backed complaints made against China by the United States, the European Union and Canada.
The latest ruling overthrew one aspect of the July ruling, which held that China's treatment of knock-down car kits contravenes the country's accession commitments to the WTO.
China considers auto parts as a complete vehicle if they account for 60 percent or more of the value of a vehicle, and charges a 15-percent higher tariff on them. The Chinese measure is designed to prevent tax evasion by companies that import whole cars as spare parts to avoid higher tariff rates.
In their complaints, the U.S., the EU and Canada argued that the Chinese tax measure deters automakers from using imported parts to build cars in the country, in violation of WTO rules.
"The WTO Appellate Body confirmed that China’s discriminatory taxation of U.S. auto parts is fundamentally at odds with core WTO principles," U.S. Trade Representative Susan Schwab said in a statement. "Especially in light of the current problems faced by the U.S. auto industry, I expect China to comply promptly with its WTO obligations by removing an unlawful and unfair trade barrier that is harming U.S. workers and manufacturers."
The latest ruling overthrew one aspect of the July ruling, which held that China's treatment of knock-down car kits contravenes the country's accession commitments to the WTO.
China considers auto parts as a complete vehicle if they account for 60 percent or more of the value of a vehicle, and charges a 15-percent higher tariff on them. The Chinese measure is designed to prevent tax evasion by companies that import whole cars as spare parts to avoid higher tariff rates.
In their complaints, the U.S., the EU and Canada argued that the Chinese tax measure deters automakers from using imported parts to build cars in the country, in violation of WTO rules.
"The WTO Appellate Body confirmed that China’s discriminatory taxation of U.S. auto parts is fundamentally at odds with core WTO principles," U.S. Trade Representative Susan Schwab said in a statement. "Especially in light of the current problems faced by the U.S. auto industry, I expect China to comply promptly with its WTO obligations by removing an unlawful and unfair trade barrier that is harming U.S. workers and manufacturers."
Labels: China
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