China will act according to the rules, officials said Thursday
over a World Trade Organization (WTO) dispute on car parts which
some experts have said is unfair to the country.
"China respects the procedure of the WTO to solve the dispute,"
Foreign Ministry spokesman Liu Jianchao said at a regular news
A WTO panel ruled on Wednesday that the country improperly taxes
imported car parts at the same rate as finished vehicles. The case,
initiated by the United States, European Union and Canada, is the
first time China has been the subject of a complaint that went all
the way to the WTO's Dispute Settlement Body, since joining the
organization in 2001.
The Permanent Mission of China to the WTO said in a statement
Thursday that China is investigating the initial WTO ruling. It
said China respects the WTO procedure but otherwise will not
comment before the panel makes its final decision.
China taxes imported auto parts at the same rate as completed
automobiles if more than 60 percent of parts the finished vehicles
are made from are imported.
The rules aim to prevent tax evasion by companies who import
whole cars as spare parts to avoid higher tariff rates, officials
from the Ministry of Commerce had said.
The US and EU filed the case to the WTO in March 2006,
complaining China's taxes on imports of foreign auto parts
discouraged Chinese carmakers from using them.
But analysts said the status quo will hardly change even if a
sanction is imposed.
"I don't think it will be a big help for them financially even
if China slashes its tariffs on parts as requested," Liu Yuandong,
an analyst with CSM Worldwide, an international industry
consultant, was quoted by Reuters as saying.
Zhou Shijian, a trade expert, said China's regulation on car
parts aims to prevent tariff evasion and is not to prejudice
against foreign carmakers. He said the WTO decision is unfair to
"It could push China to re-examine the rationality of WTO
rules," Mei Xinyu, a Ministry of Commerce researcher, said.
China is the world's second-largest vehicle market after the US.
Sales rose 22 percent last year to 8.8 million units, according to
the China Association of Automobile Manufacturers.
(China Daily February 15, 2008)