Is China playing around with trade rules to maintain an advantage?
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Officials from the US and European Union have been prompted to file a complaint against China with the World Trade Organization (WTO), alleging that the up-and-coming Asian country has been manipulating taxes and tariffs on imported auto parts in an attempt to provide protection for domestic Chinese auto manufacturers.
China was to ramp down its protectionist efforts on auto parts as a condition of joining the WTO, and for the most part, tariffs and taxes on vehicles and auto parts have steadily dropped over the last four years. Tariffs on imported vehicles remain higher than those on components, however, which leads companies such as Cadillac to import "knock-down" kits of components that are then assembled into complete vehicles on the mainland. China claims that such actions are merely efforts to get around the higher tariffs on complete vehicles (well, duh), and is now looking to tax such component kits at the same rate as completed vehicles.
How this whole story will play out - and what effect it will have on foreign companies who do business in China - is yet unknown, but it seems clear that we'll have several years before anything resembling "free" or "fair" trade takes place between China and the West.
[Source: Detroit News]
Reader Comments (Page 1 of 1)
Richard Warren 1:55PM (6/01/2006)
"Is China playing around with trade rules to maintain an advantage?"
That question even needs to be asked??
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ghughes 1:55PM (6/01/2006)
WHO CARES! - China is just copying what Japan does - and that worked out great for their auto industry- high tariffs, complicated rules that stop foreign cars from importation, loyal citizens who understand that buying from their own country is best, huge state subsidies for the auto industry, currency manipulation, break all anti-trust rules, direct govt investment in technologies, ie hyrbid powertrains....
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Proud Japanese 2:19PM (6/01/2006)
If the U.S. and EU don't keep their word about tariffs on Chinese imports, why should China?
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7of7 2:41PM (6/01/2006)
The Chinese hate the Japanese. This is very nice in an understated Asian sort of way.
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Meek 3:32PM (6/01/2006)
You mean the country that requires a company to work with a partner Chinese company in order to sell vehicles, and does little to deter copies of products may be playing with currency to their advantage? I would say if they could figure it out, it's happening.
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Ben 3:36PM (6/01/2006)
rules are created to be played around with, every country plays around with rules. Don't say it like it's something China invented.
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mpeng 4:18PM (6/01/2006)
wait, a country is playing with the rules to their advantage...unheard of...should we crusade for human rights or money...human what?
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MikeInNC 4:35PM (6/01/2006)
Read an interesting article in a recent issue of Inc. magazine. yesterday. China is probably the greatest offender of Intellectual Property Right theivery in modern times. They have developed a scheme by which you must submit detailed plans of anything you wish to import to China to a government agency. They, in turn give you a vague non-guarantee and in no time at all, your products is available in China and made by Chinese on every corner. This would be very difficult if their government were not totally complicit in the matter. After they have made tons of money off of the stolen product they settle with the company for a pittance of what they have gained. Many tech companies just flat refuse to do business with them anymore.
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Chris 5:34PM (6/01/2006)
China manipulates everything in their markets for cars to fake Rolex watches to bootleg DVD's! I know this because I just spent three weeks in Beijing and Shanghai and had about 50 people try to sell me a the above, minus the car. The fact that the only way they would allow a foreign maker to enter the market was to be a joint venture with a Chinese company is pretty lame. What makes it worse is that the Chinese partner gets all the technology the automaker brings in for FREE! So at the end of next year when the "Red" tape comes down, Shanghai Automotive Industrial Comapany (SAIC) will inherit all the technology and equipment for GM and VW (the market leader) without paying a dime. Oh yeah, the Central Government also owns 90% of the auto industry there!! Maybe thats the reason behind this.
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gbh 5:56PM (6/01/2006)
As Richard noted, is there really a question?
Every government plays these games, it is the nature of international trade. Always has been, always will be.
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Fabulo 7:37PM (6/01/2006)
What a shocker. I really thought China was playing nice with everyone else. After all, they have all interests in being nice to others, because of all the pressure we put on them to be good, responsible world citizen.
It's not like China is ruled by a communist dictatorship, with all the advantages that comes with: lack of corruption, strict enforcement of fair laws and rules, respect of human rights.
Did I just say that? What's the trade deficit with China again? Who keeps giving them our dollars and euros? Yeah, they have such a good incentive to play nice...
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Howard Kerr 8:24PM (6/01/2006)
Fabulo, you nailed it completely.
The sad thing is, the U.S. and it's many companies doing business in China, refuse to wake up to this. The Chinese will soon start exporting cars to the world at prices the Koreans can only dream about...much less the Europeans and us Americans. The next high dollar product this country will work to get ahold of? Aircraft. They are already working at becoming a world supplier of commercial rockets.
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Chris 12:49AM (6/02/2006)
Who wants a to support a government who points missles at a legitimate and independent state? And threatens America's national security with Military buildup? Money = Votes and the Chinese will certainly not have my vote, unless there are big changes.
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scatman 11:26PM (6/02/2006)
How many of you fools (er...sheep), who are opposed to China's lack of human rights, shop a Wal-Mart, or own a Lenovo laptop PC (formally IBM Thinkpad).
Wake up...America is for sale.
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selihcra 9:43PM (6/03/2006)
America has been for sale many years ago. First Japan, now China.
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