China cuts auto-parts tariffs after WTO rules

Shanghai, August 28 (Gasgoo.com) China has scaled down its tariffs on imported auto parts after losing an appeal against a WTO ruling that it was breaking international trade rules, the Associated Press reported today.

Starting September 1, all imported auto parts will be taxed at the same rate regardless of the percentage of foreign-made parts used for making a vehicle in China, according to a notice posted on the Web site of the National Development and Reform Commission (NDRC), the nation's top economic planning body.

The Chinese government was asked to amend its regulations after the World Trade Organization (WTO) ruled against its policy of requiring foreign automakers to buy more than 40% of the components used in any China-made vehicle from local suppliers or pay more than double the usual tariff on imported parts.

The WTO ruling last year that such policies violate international trade rules was a rare coup for China's trading partners. Beijing lost an appeal against the ruling in December, the AP said.

The higher tariffs were intended to prevent automakers from evading steep auto import duties by importing large chunks of cars. The U.S., the EU and Canada contended that the tariffs encouraged auto-parts companies to shift production and jobs to China.