US/China Trade Tensions Thicken Over Auto Parts
Thursday, March 30, 2006JEFF YASTINE: The United States is raising the pressure on China, filing a new trade complaint over China`s treatment of auto part imports. In its complaint to the World Trade Organization, the U.S. argues China is discriminating against foreign companies in an effort to boost home grown Chinese competitors. As Darren Gersh reports, a $600 million market for U.S. exports is at stake.
DARREN GERSH, NIGHTLY BUSINESS REPORT CORRESPONDENT: China slaps tariffs of up to 14 percent on imported auto parts, but doubles that for imports of new cars. The problem is how China enforces those tariffs when it comes to foreign auto makers assembling cars in China.
ROB PORTMAN, U.S. TRADE REPRESENTATIVE: What the Chinese have done is they have said once a car is assembled, if the value of the car includes more than 60 percent of imported auto parts, they will go back retroactively and apply a tariff to the auto parts that is the car tariff - - in other words, more than doubling in some cases the tariff. That`s simply unfair.
GERSH: The U.S. charges China is breaking World Trade Organization rules with what amounts to a local content policy, forcing foreign auto makers to use Chinese-made parts. That`s why the European Union joined the U.S. in filing the WTO case. U.S. manufacturers hope the joint action will send a message to China.
PATRICIA MEARS, NATIONAL ASSOCIATION OF MANUFACTURERS: We don`t want to see this kind of thing spread through various sectors, so we support this kind of case being brought.
GERSH: Under WTO rules, the U.S. and China will begin a 60-day consultation period to try to hammer out a solution. High-level talks are scheduled in a few weeks, but the timing of today`s announcement reduces expectations for Chinese President Hu Jintao`s visit to Washington later in April.
JOHN MAGNUS, PRESIDENT, TRADEWINS: They had hoped that they would have some serious accomplishments to announce by the time of the Hu visit, and now it does not look like there will be very much for them to announce -- less than they would have hoped for, less than I would have hoped for.
GERSH: This is only the second time the Bush administration has taken a trade complaint against China to the WTO. Other cases are now possible with intellectual property violations and domestic subsidies for Chinese industries topping the complaint list. Darren Gersh, NIGHTLY BUSINESS REPORT, Washington.
