- Aug 31, 2009
REPORT: U.S. psyched as China decides to cut auto part tariffs
Chinese-market 2010 Buick Regal – Click above for high-res image gallery
China joined the World Trade Organization in 2001, at which point it was given five years to adjust to the rules of open trade before any complaints were lodged against it. On schedule, in 2006, the complaints began, lodged by the U.S., Europe, and Canada.
In one example of open trade prohibitive practices, Automotive News reports that if a car built in China uses a percentage of imported auto parts above a specific threshold, China taxes each imported part an additional 25%. In such a price-competitive atmosphere, such a policy all but proscribes the use of imported parts, a move that has lead to complaints from all three continents.
The original complaint was decided at the end of last year in a ruling against China. Beijing appealed, to no avail. In response, China has rescinded the tax, which is an initial step to truly opening the market up for foreign parts- and automakers.
The U.S. trade in auto parts to China is not even 1/13th what it is to Mexico, a statistic that a host of companies would clearly like to change.
[Source: Automotive News, sub req'd]