China may appeal WTO car parts ruling

BEIJING (AFP) — China said Thursday it reserved the right to appeal a World Trade Organisation ruling against it on imported car part tariffs.

The WTO's dispute settlement panel late last week urged China to bring what it termed "inconsistent measures... into conformity with its obligations," triggering an annoyed response from the Chinese commerce ministry.

"The Chinese side does not completely agree with the content and conclusion of the dispute settlement panel's report," the ministry said in a brief statement.

"According to the dispute resolution procedures of the WTO, the Chinese side reserves the right to appeal."

Beijing has a minimum local content requirement of 60 percent for home produced cars. A vehicle that fails the criterion suffers the same tariff as if it had been imported completely built.

China imposes an import duty of 25 percent on whole vehicles and only 10 percent on auto parts.

China has said the rules aim to prevent tax evasion by companies that import whole cars as spare parts to avoid higher tariff rates.

But the United States, as well as co-complainants Canada and the European Union, argued that the measure violated China's WTO accession agreement, which pledged a progressive opening up of Chinese markets.

The measure puts pressure on foreign auto parts producers to re-locate their manufacturing facilities to China and discourages car makers in China from using foreign auto parts in the assembly of vehicles, the United States argued.