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China regrets WTO car part ruling
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China on Tuesday expressed regrets over the World Trade Organization's (WTO) decision to uphold its ruling that Chinese auto parts import practices violated WTO rules.

The WTO Appellate Body said Monday it largely upheld a July panel ruling that backed complaints by the United States, the European Union and Canada.

But it overruled the aspect of the ruling that said China's treatment of knock-down car kits bypasses the country's WTO accession commitments.

China welcomed the overruling as it supported an appeal made by China to correct the WTO panel's mistakes, Yao Jian, spokesman of the Ministry of Commerce, said in a statement on Tuesday.

But China expressed regrets over the WTO's decision to uphold other aspects of the ruling, according to the statement.

China considers auto parts as a complete vehicle if they account for 60 percent or more of the value of a complete vehicle and charges a 15 percent higher tariff on those parts.

The measure is aimed to prevent tax evasion by companies that import whole cars piece-by- piece to avoid higher tariff rates.

However, the three complainants argued that the Chinese tax measure deters auto makers from using imported parts to build cars in China, thus violating WTO regulations.

A WTO panel decided in July that China's import practices defy WTO rules. China appealed the panel's conclusion before the WTO Appellate Body in September.

China now must bring its practices into compliance with WTO rules. The period of time in which China will expected to make this shift will be negotiated by arbitration.

(Xinhua News Agency December 16, 2008)

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