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US wins WTO case against China on luxury cars

24 may 2014, 13:26
0
World Trade Organization (WTO) Director-General Roberto Azevedo. ©Reuters/Denis Balibouse
World Trade Organization (WTO) Director-General Roberto Azevedo. ©Reuters/Denis Balibouse

The WTO on Friday rejected Chinese tariffs on US-made luxury cars, handing Washington a victory on one of the growing number of disputes between the world's two largest economies, AFP reports.

A World Trade Organization panel, responding to a US complaint, found that China was inconsistent with the global body's rules when it imposed tariffs in December 2011 over alleged US dumping and subsidies.

China, the largest foreign market for US automakers after Canada, ended the tariffs in December 2013 as the WTO case progressed. But a US official said Washington insisted that the WTO formally rule against the measures to ensure they stay off the books.

"The message is clear -- China must follow the rules, just like other WTO members," US Trade Representative Michael Froman told reporters, echoing a common message from President Barack Obama's administration when responding to concerns about Beijing.

"Americans deserve to compete on a fair and level playing field, and we will never stop fighting to ensure that our trading partners live up to the commitments they made in our international trade agreements," Froman said.

China imposed the tariffs over what it said were unfair US practices amid a raft of trade disputes. But Froman noted that the United States had won in all three cases that had come to WTO resolution, the others concerning steel products and broiled chickens.

The WTO decision came at the end of an especially tense week between the two powers, with the United States on Monday for the first time indicting Chinese military officers for allegedly stealing trade secrets through hacking.

Strong market for US

China in 2011 had imposed tariffs for alleged dumping -- selling in a foreign market at below home-market prices -- that ranged from 2.0 to 21.5 percent. It also slapped tariffs of up to 12.9 percent for what it said were US subsidies.

Consumers in China, unlike those in some more developed Asian nations such as Japan and South Korea, have shown a strong appetite for cars from the United States as incomes grow.

In 2013, the United States sold $8.5 billion in cars to China, about 13 percent of global US auto exports. The US Trade Representative's office said that the duties in question affected more than half of US car exports to China.

The tariffs applied to cars from Detroit's Big Three -- General Motors, Chrysler and Ford Motor -- and also to automobiles from BMW, Mercedes-Benz and Honda that were manufactured in the United States.

US lawmakers, who frequently accuse China of using unfair trading practices to sell low-cost goods overseas, cast the WTO decision as a victory for ensuring the world's largest developing economy abides by rules of the WTO, which it joined in 2001.

"It is laughable for China, the biggest dumping perpetrator in the world, to claim that US vehicle exports are being sold in China below the cost of production when they are obviously not," said Senator Carl Levin, who represents the auto state of Michigan.

China did not immediately react to Friday's ruling. The state-run Xinhua news agency noted that the WTO did not agree with all US points and quoted a commerce ministry spokesman as saying in 2011 that US subsidies and dumping had "substantially harmed" China's auto industry.


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