Parts Makers Win Trade Dispute

(David Shepardson — Detroit News)

WTO rules that China’s hefty import tariffs discriminate against U.S. auto suppliers.

The World Trade Organization ruled Friday that China violated trade laws by hiking taxes on auto parts imported from the United States, — a decision that could boost struggling Canada and the European Union U.S. auto parts makers.

Critics of China’s policy said it encouraged suppliers to relocate to China, costing jobs in their home markets.

The “report leaves no doubt that China’s discriminatory treatment of U.S. auto parts has no place in the WTO system,” said U.S. Trade Representative Susan Schwab. “We will not stand idly by when China or any other country adopts regulations or industrial policies that tilt the playing field against American goods or services.”

Schwab’s office said U.S. auto suppliers set up operations in China so automakers could avoid hefty tariffs they had to pay if they used less than 51 percent Chinese-made parts in vehicles built in China. The policy has helped China’s auto parts companies, resulting in a steadily rising Chinese auto parts trade surplus.

Bob McKenna, president and CEO of the Motor Equipment Manufacturers Association, a trade group that represents many U.S. auto parts makers, said the WTO’s decision would “ensure a more level playing field for our products in China.”

The U.S. first objected to the Chinese policy in March 2006, and a hearing panel was formed in October. China has the right to appeal Friday’s decision, but an appeal likely would be resolved within six months.

It could take years before the United States would be allowed to impose economic sanctions on Beijing for failing to comply with the ruling. If it opts not to appeal, China has an undefined “reasonable period” to end the tariffs. If it does not, the United States would have to appeal to a separate WTO panel and win a ruling that China had not taken corrective action before it could impose sanctions. The process is designed to convince countries to work out their differences. Read the complete article.