By Peggy B. Hu
Washington File Staff Writer

Washington - The United States, the European Union (EU) and Canada are requesting the World Trade Organization (WTO) establish a dispute settlement panel regarding China's treatment of imported auto parts, U.S. Trade Representative (USTR) Susan Schwab announced in a September 15 press release.

According to a USTR press release, China is imposing charges that "unfairly discriminate against imported auto parts and discourage automobile manufacturers in China from using imported auto parts in the assembly of vehicles."

Under China's regulations governing the import of auto parts, all vehicle manufacturers in China that use imported parts must register with China's Customs Administration and provide specific information about each vehicle assembled, including a list of the imported and domestic parts to be used and the value and supplier of each part.  If the number or value of imported parts in an assembled vehicle exceeds specified thresholds, the regulations assess each of the imported parts a charge equal to the tariff on complete automobiles (typically 25 percent) rather than the tariff applicable to auto parts (typically 10 percent).

"The United States believes that these charges are inconsistent with China's WTO obligations," the USTR said.

The United States and the EU requested WTO dispute settlement consultations on the issue March 30.  (See related article.)

The United States, Canada, and the EU subsequently held joint consultations with China in Geneva May 11 and 12.  Australia, Japan and Mexico - which also export auto parts to China - participated in the consultations as third parties.

"Working together with Canada and the EU, we have tried to resolve this issue through consultations as we always prefer to negotiate rather than litigate, but China has demonstrated no willingness to remove its unfair charges," Schwab said.

"While we remain open to settling this dispute, China's current stance leaves us no choice but to proceed with our WTO case. We are committed to providing a level playing field for U.S. exporters to China and, as we have made clear, we will not hesitate to pursue dispute settlement if necessary," she said.

The full text of the press release is available at the USTR's Web site.

Additional information on the WTO's dispute settlement process and current cases is available on the WTO Web site.

For more information on U.S. policy, see The United States and China.