China regrets WTO decision on auto parts

BEIJING (AFP) — China expressed regret Tuesday over a World Trade Organisation ruling that its tariffs on imported car parts were not in line with global rules, and refrained from saying it would comply.

Commerce ministry spokesman Yao Jian said Beijing welcomed sections of the WTO ruling on imported car kits, but was unhappy its appeal on imported parts was turned down.

"We express our regret over the appeal panel's verdict over the rest of the ruling," Yao said in a statement on the ministry's website, referring to the judgement on auto parts.

The WTO's Dispute Settlement Body ruled in July that China's policies were inconsistent with WTO rules, a decision that was welcomed by the United States which brought the complaint along with Canada and the European Union.

China appealed against the ruling, but the WTO's appeal body said Monday in Geneva that it upheld the original verdict.

Following the verdict the United States asked China to honour the WTO ruling and lift its tariffs.

"I expect China to comply promptly with its WTO obligations by removing an unlawful and unfair trade barrier that is harming US workers and manufacturers," US Trade Representative Susan Schwab said in a statement.

Welcoming the ruling, Europe's top trade official Catherine Ashton said: "China should now put an end to the discrimination and ensure a level playing field in its automotive sector."

Beijing requires that home-produced cars contain a minimum of 60 percent local content. A vehicle that fails that criterion is slapped with the same tariff as if it had been imported completely built.

China imposes an import duty of 25 percent on whole vehicles and 10 percent on auto parts. It has said the rules aim to prevent tax evasion by companies that import whole cars as spare parts to avoid higher tariff rates.