China delays WTO probe into auto parts

Geneva, Sept 28 | Updated: Sep 29 2006, 05:30am hrs
China on Thursday exercised its right to delay a World Trade Organisation (WTO) probe into its rules on auto part imports sought by the United States, the European Union and Canada.

The case, the first involving China to reach litigation, will automatically proceed, however, as soon as Washington, Brussels and Ottawa make a further request.This could come at the next meeting of the WTOs dispute settlement body on October 26.

The three want China - which joined the WTO in 2001 - to change rules on import tariffs that they say hinder foreign auto makers and car parts suppliers in China, now one of the worlds biggest auto markets.

China considers car parts as a whole vehicle if they account for 60% or more of the value of a final vehicle and it charges a higher tariff on them, the EU says. The rule helps Chinese car parts makers and breaks WTO rules, EU, US and Canadian officials say.

Car makers from both sides of the Atlantic have invested heavily in China to set up joint ventures to make vehicles. Japan, Australia and Mexico have participated in the auto parts talks as interested third parties.

The United States, which ran a record $202 billion trade deficit with China last year, feels the $19 billion auto parts market could play a larger role in narrowing the gap.