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Last Updated: Friday, 31 March 2006, 06:52 GMT 07:52 UK
China, US and EU in tariffs row
US commerce secretary at Ford car plant in Chongqing
The latest spat marks round two at the WTO between the US and China
China has said it "regrets" a decision by the US and European Union (EU) to step up a row over car parts imports.

The US and EU have accused China of imposing illegal tariffs to prevent foreign components being imported for use in Chinese car assembly plants.

The two have now turned to the World Trade Organisation (WTO) to open up the $19bn (10.8bn) auto parts market.

The row is the latest in a series of disputes triggered by China's growing muscle in the global trade market.

Brussels and Washington have now taken formal steps to resolve the row.

As a result, China now has 10 days to respond to the request from the EU and US - if the matter is not resolved within 60 days a formal WTO panel could step in to rule on the dispute.

"The Chinese side expresses regret over this and is earnestly studying the request for consultations by the EU and the United States," Ministry of Commerce spokesman, Chong Quan said in a statement on the department's website.

Ongoing battle

It marks the first time the EU has taken China to the WTO since 2001, while it is the second case that the US has brought and comes days after Brussels decided to slap '"anti-dumping" tariffs on leather shoe imports from Asia.

Both Brussels and Washington have been complaining that China has failed to open up access to its domestic markets while the EU and US have been flooded with cheap Chinese products.

They have also raised objections to the counterfeiting of Western goods - such as luxury brand clothing, DVDs and music - while the US has also accused the country of holding its currency at deliberately low levels.

Western carmakers have invested heavily in the fast-growing Chinese market.

As a result they now account for almost a quarter of the country's vehicle production.

However, under Chinese law, if imported parts make up more than 60% of the vehicle they are taxed at a rate equal to the tariff on an imported car - raising their tariff from 10-14% to the higher rate of 28%.

Beijing says the rules are aimed at preventing manufacturers from evading taxes by importing cars bit by bit then reassembling them in China.




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