Financial Review: US, EU begin trade action against China

US, EU begin trade action against China
Rob Lever | AFP | Washington
2006/04/01
The United States, joined by the European Union, has initiated a World Trade Organisation complaint against China, alleging that Beijing is unfairly blocking foreign-made car parts.
US Trade RepresentativeRob Portman said the US and EU had taken the first step in the WTO complaint process, calling for dispute settlement consultations with China.
"As a mature trading partner, China should be held accountable for its actions and be required to live up to its responsibilities," MrPortman said.
"China‘s regulations on imported auto parts appear to violate its WTO obligations. While the US has raised this issue repeatedly and sought repeal of these measures, the problem has not yet been resolved."
In Brussels, officials said they hoped to resolve the complaint through the consultation process.
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"Consultations will allow us to clarify the legal issues and find a mutually satisfactory solution," EU Trade Commissioner Peter Mandelson said. "It remains my strong preference and intention to seek an amicable solution to this issue."
The action comes a month after a US delegation went to China to seek a resolution of the dispute.
US and EU officials object to what appear to be domestic content requirements for cars made in China. Tariffs are applied to certain imported parts.
The office of the US Trade Representative said China‘s taxes on imported parts "discourage automobile manufacturers in China from using imported auto parts in the assembly of vehicles". The USTR said this was inconsistent with China‘s WTO commitments. The complaint underscores growing trade friction with China amid complaints that Beijing uses unfair barriers and possibly currency manipulation to sell more goods to the US. The US trade deficit with China reached $US201.6 billion ($283.6billion) in 2005, up 24.5per cent on the previous year.
This prompted US officials to create a taskforce on trade with China and to initiate a review of all aspects of the trade relationship.
"As noted in our top-to-bottom review of US-China trade policy, we will not hesitate to pursue our legal options when negotiations are not productive," Mr Portman said.
"As also indicated in the review, we seek to enhance co-operation with our trading partners in promoting China‘s accountability and reform. Today‘s actions are consistent with these commitments."
For the EU, the issue marks a new point of conflict in trade relations with Beijing after disputes over Chinese clothes and shoe imports over the past year.
The EU‘s executive commission said it had first raised the car parts issue with Chinese authorities in 2004 and called for action to fix the problem in October 2005.
China has 10 days to answer the commission‘s request and has to start consultations within 30 days.
If a resolution is not found over 60days, parties can ask a WTO panel to rule in the dispute.
 
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