WTO Finds China Tariffs on Auto Part Imports Unfair
By Chris Haak
02.14.2008
The World Trade Organization has issued a preliminary ruling that China is breaking its rules by giving imported auto parts less favorable treatment than domestically produced parts. China will be asked to either give equal treatment to imported parts, or may appeal the decision. This marks the first time that the WTO has ruled against China’s practices.
The complaint was filed with the WTO by the US, Canada, and the European Union on behalf of their domestic auto industries. The high tariffs on imported parts reduce production in the US, Canada, and Europe and result in job losses in those countries, while China’s economy benefits.
For its part, China claims that it maintains the same tariff on imported auto parts that it has on importing whole autos to prevent manufacturers from importing mostly-assembled vehicles and putting them together within China’s borders to avoid the tariff. You know, the same practice that gets the Dodge/Freightliner Sprinter into the US without being subject to the 25% “chicken tax” and the same process that other foreign companies (including Chinese ones) are employing or considering employing to enter the US market.
Frankly, with the stories about China’s business practices and lack of regard for intellectual property (many of which have been covered by this site before) that have been circulating for several years, I’m surprised that this is the first successful sanction of China’s practices. It will be interesting to see how this plays out, but it may be too late anyway; those jobs are already lost and China’s auto industry is developing at a breakneck pace. Western companies fixated on short-term results have taught their Chinese “partners” how to build modern vehicles, and will likely be marginalized in the coming years as the Chinese automakers’ capabilities increase.
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