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Last Updated: Friday, 15 September 2006, 14:34 GMT 15:34 UK
China car parts row taken to WTO
Chinese car production workers
The EU has accused China of protectionism
The European Commission has filed a complaint with the World Trade Organization (WTO) against import tariffs imposed by China on car parts.

The US and Canada are also calling on the WTO to rule in the dispute.

They say the taxes are illegal and are designed to prevent foreign components from being imported for use in Chinese car assembly plants.

The Commission said car firms were effectively forced to use Chinese parts at their factories in China.

It is the first time that Western nations have allied themselves together to demand a formal investigation into practices by China.

Concerns

We have tried again and again to find an acceptable, negotiated solution to this issue
Peter Mandelson
EU Trade Commissioner

The Commission is concerned that China is treating imports of car parts as "complete vehicles".

Under commitments reached when it joined the WTO, China agreed not to impose tariffs of more than 10% on imported parts.

But complete vehicles attract tariffs of 25%, so if manufacturers want to avoid the tariff, they have to buy parts locally.

"We have tried again and again to find an acceptable, negotiated solution to this issue and without Chinese engagement we have no alternative but to take this course of action," said EU Trade Commissioner Peter Mandelson.

US trade representative Susan Schwab added: "China's current stance leaves us no choice but to file a trade case."

Canada's trade minister, David Emerson said China continued to "impose unfair tariffs on auto parts, in breach of its WTO commitments".

Protectionism

In earlier negotiations, China refused to change the measures which it says are in line with WTO rules.

The global car parts market is worth an estimated $19bn (10.8bn) a year.

Europe has itself been accused of protectionism.

The EU has put up tariffs against Chinese clothing and shoes, saying they are unfairly subsidised by the Chinese government.

Beijing counters that Europe is simply adopting protectionist policies.

The EU has also been accused of holding up a new global trade agreement by refusing to reduce the amount of subsidies it gives its farmers and the tariffs it imposes on imported foodstuffs.


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