WTO Standing On Sidelines in China Auto Parts Tariff Dispute

An arbitration panel of the World Trade Organization (WTO) has not been called to hear a tariff dispute involving the import of auto parts to China due to China’s willingness to continue with the consultation with relevant countries, says a report from the Xinhua media outlet.
According to the report, Ministry of Commerce spokesman, Chong Quan, said on Thursday that China conducted “constructive consultations” with the United States, European Union and Canada on May 11th and 12th.
Chong said that the consultations, which were joined by Japan, Mexico and Australia, have allowed all parties to clarify their positions but didn’t result in any breakthroughs.
“China would like to continue the discussions with all relevant parties,” he said, without giving a possible timetable.
The WTO regulations stipulate that if relevant parties fail to reach an agreement within 60 days of the filing of a WTO complaint, an expert panel is to be established to arbitrate the dispute.
The Delegation of the European Commission in China confirmed to Xinhua,that EU trade commissioner Peter Mandelson has not yet exercised the right to bring in an arbitration panel.
The United States and EU jointly filed a complaint with the WTO over China’s tariffs on car imports on March 30, which was followed by Canada on April 13.
Dominik Declercq, chief representative of European Automobile Manufacturers Association Beijing Representative Office, said a WTO
arbitration panel could take two or three years to make its ruling.
“China has shown a soft heart when it comes to trade disputes,” said Mei Xinyu, a trade expert with the Chinese Academy of International Trade and Economic Cooperation.
Since its entry into the WTO in 2001, China has filed only one WTO complaint jointly with the European Union, Japan and other countries against the protectionist measures of the United States for iron and steel industries, he said.
“China is even less active than India and Brazil in resorting to the WTO dispute settlement mechanism,” said Mei, adding that all previous WTO complaints against China have been resolved through consultation.
The latest complaint centers on a policy implemented last April, which set an average tariff of 30 percent for imported whole vehicles, and 15 percent for auto parts.
The EU claimed that these rules contravene China’s WTO obligations because a foreign-funded car marker has to source at least 40 percent of its parts in China in order to avoid the whole car tariff. China explained that the policy was set up to curb tax evasion by foreign carmakers.
Industrial analyst Jia Xinguang pointed that manufacturers of high-end vehicles, where were affected most by China’s tariff have toned down their previous complaints and have speeded up the production or procurement of spare parts in China.
Daimler-Chrysler announced its recent plan to spend 840 million US dollars to purchase spare parts in China by 2008, more than seven times its current figure of 100 million US dollars.
Apart from a procurement budget of one billion U.S. dollars for local spare parts this year, Volkswagen AG said that it was even considering moving some of its German procurement plans to China.
Mei Xinyu said that China needs a triumph over WTO complaints to deter countries and interest groups from making trouble without a just cause.