WCA November 2008

Statue of Liberty Image from BigStockPhoto.com Photographer: Marty

The WTO case dates to March 2006 when the European Union, Canada and the US filed a complaint against China. The decision represents the first time China has lost a case before the WTO since becoming a member of the global trade supervisor in 2001. News of the WTO decision, issued 18 th July in Geneva, was welcomed by American lawmakers who have accused China of employing subsidies, tax incentives, and an undervalued currency to give an unfair advantage to its own companies. The combination of benefits has, in this view, helped to drive up China’s record trade surplus. “The panel report leaves no doubt that China’s discriminatory treatment of US auto parts has no place in the WTO system,” the US trade representative, Susan C Schwab, said in a statement. The latest US government data show that hard times ❖ in the nation’s auto industry have led to a big decline in industrial output. The Federal Reserve reported 15 th September that industrial output dropped 1.1% in August, nearly four times the amount that economists had been expecting. The weakness was led by an 11.9% drop in production of motor vehicles and parts. The problems in autos contributed to a 1% overall drop in manufacturing, the first decline since a 0.9% fall in April.

Automotive

The WTO rules against China over tariffs on foreign auto parts In hopes of offsetting slumping sales in North America, Europe, and Japan, overseas car makers have invested more than $20 billion in the Chinese auto market, Asia’s biggest. In a finding of keenest interest to these producers, the World Trade Organisation has ruled that China violates global trade rules by requiring that auto makers operating in the country buy their components from local suppliers or face penalties. China compels Ford Motor, Volkswagen, Renault, and other foreign auto makers operating there to buy a quota of their components from local suppliers – or pay more than double the standard import duty on their parts. Since April 2005, auto makers have had to provide detailed information to Chinese authorities on the quantity and value of imported parts in their vehicles. When a set level of foreign-parts content is reached, the parts become subject to the 25% tariff applicable to complete vehicles instead of the 10% tariff that applies to parts.

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Wire & Cable ASIA – November/December 2008