China blocked an attempt by the European Union, the United States and Canada
to seek a World Trade Organization ruling on the legality of China's tariffs on
auto parts.
During a regular meeting of the WTO dispute settlement body, China opposed
the request to set up a panel of experts to referee the trade tussle.
Such a move is allowed under the rules of the 149-nation WTO, which tries to
resolve disagreements over international commerce.
However, WTO members can only use the blocking tactic once and panels are
usually created at the following dispute settlement body session.
The next session is due in October, and the potential panel would thereafter
have six months to issue its ruling.
The auto parts complaint is only the second against China since it joined the
WTO at the end of 2001.
In March 2004 the United States took China to the WTO over what it said were
Beijing's tax breaks for Chinese computer chip makers, but the two sides
negotiated an end to the dispute four months later and the WTO was never called
in.
But Brussels, Washington, Ottawa and Beijing failed to settle the auto parts
issue in direct negotiations, and the aggrieved trio announced on September 15
that they were turning to the WTO.
The three plaintiffs claim that the tariff regime puts their car
manufacturers at a disadvantage compared to local Chinese producers when they
import spare parts.
The plaintiffs claim that the rules are an underhand way of imposing a quota
of at least 40 percent of Chinese-made spare parts on cars that are built in
China, in breach of Beijing's obligations as a WTO member.
WTO rules forbid governments from forcing companies to source products
locally.
China has countered that the regulations are aimed at preventing criminals
from using the difference in import tariffs on entire cars and on auto parts to
escape customs supervision and evade taxes.
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