The auto parts battle that has lasted for two years has finally settled. The World Trade Organization Appellate Body announced on the 15th the ruling on the dispute between China and the United States, the European Union and Canada on auto parts, which maintained the results of the WTO panel of judges in July and considered that the Chinese measures involved violated the national treatment. China’s defeat in this trade dispute was the first time it lost a suit since it joined the WTO.
According to relevant procedures, the judgment of the Appellate Body will be approved by the WTO Dispute Settlement Body within 30 days and will take effect. After the verdict comes into effect, China must amend the non-compliance measures within a certain period of time. This period will be determined through the parties' negotiation or arbitration by the WTO.
The reporter learned that in the ruling, the Appellate Body’s report overturned the ruling of the Group that China’s practice of imposing a tax on a complete set of parts and a half-set of spare parts in violation of the WTO commitments.
Yao Jian, the spokesperson of the Ministry of Commerce, said in a statement on this matter that the Chinese side noticed that the Appellate Body had supported China’s appeal request in terms of import tariffs on CKD/SKD, and corrected the previous erroneous ruling of the Group of Experts. China welcomes this, but at the same time, it regrets that the Appellate Body has upheld the other parts of the panel's decision.
The dispute between China and the United States, the European Union, and Canada regarding auto parts has continued for more than two years. In the event that the dispute was negotiated but no agreement was reached, on October 26, 2006, the WTO Dispute Settlement Body established an expert group. To hear the case. On July 18, 2008, the panel announced that the ruling report ruled that China would lose. According to the report, China’s taxation of imported vehicles by more than 60% of imported parts and components constitutes discrimination against imported auto parts and therefore violates relevant trade rules.
On September 15, China appealed the verdict and asked the WTO Appellate Body to review the case and make a fair decision. The reporter learned that the WTO Appellate Body generally needs 90 days to hear the appeal case and make a ruling. Its verdict will no longer be overturned.
Officials of the Ministry of Commerce of the People's Republic of China previously stated that since China’s accession to the WTO, China has been earnestly fulfilling its commitments, which has greatly reduced the tariffs on auto and auto parts and provided trading partners with unprecedented access to the auto and auto parts market.
expert's point
Losses will hurt the domestic spare parts industry
"This loss will make the domestic auto parts industry, and even the entire automotive industry will suffer a strong impact." In response to the loss of the parts trade dispute case, the relevant experts of the China Association of Automobile Manufacturers in an interview said that the WTO final ruling Requesting China to abandon its request for localization will slow down the process of localization of some high-tech products that are in the process of development or start-up.
“At the same time, if multinational car companies do not have the shackles of localization, more new products that are synchronized with the international market will be launched into the domestic market, and competition will inevitably intensify. This will also have an impact on domestic vehicle manufacturers.†said the expert. In addition, foreign mid-to-high-end vehicles can avoid high tariffs, assemble in the country for assembly, and finally market at lower prices, which is even worse for the already precarious domestic auto market.
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