Brussels, 27/10/2006 (Agence Europe) - The WTO will rule on the dispute between the European Union - along with Canada and the United States - and China over customs duties applied by Beijing to motor car spare parts. On 26 October, Brussels, Ottawa and Washington succeeded in getting the WTO to set up a special expert group to rule on the dispute within six months. The parties will then be able to appeal, possibly delaying the decision until the start of 2008. For the first time since its accession in 2001, China finds itself in the dock in Geneva, the American complaint of March 2004 on preferential tax treatment for Chinese electronic chip manufacturers having been retracted after Beijing and Washington reached a compromise.
Europeans, Americans and Canadians do not believe the tariff policy applied by China on imported motor car spares to be in line with international trade rules. They claim that Beijing is applying variable customs duties on spares entering the country. When imported parts represent more than 60% of the value of a car assembled in China, Chinese Customs apply the same customs duties as on vehicles, 25% rather than the usual 10%. EU, Canadian and US motor car manufacturers consider this is a roundabout way of imposing a minimum 40% locally manufactured content of vehicles assembled in China, and this violates China's commitments taken on entry to the WTO. A great deal is at stake for EU manufacturers, who account for 25% of Chinese car production today and export almost $3 billion worth of spare parts every year to China. (eh)