The Wall Street Journal-20080214-China Receives First Commerce Condemnation From WTO

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China Receives First Commerce Condemnation From WTO

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Associated Press

GENEVA -- The World Trade Organization issued its first official condemnation of Chinese commercial practices, siding with the U.S., the European Union and Canada in a dispute over car parts.

The WTO found that China was breaking trade rules by taxing imports of auto parts at the same rate as foreign-made finished cars, according to a copy of the ruling's conclusions.

The three-member WTO panel found against China on almost every point of contention with the U.S., the 27-nation EU and Canada. The panel found that Chinese measures "accord imported auto parts less favorable treatment than like domestic auto parts" or "subject imported auto parts to an internal charge in excess of that applied to like domestic auto parts."

China now will be asked to bring "these inconsistent measures . . . into conformity with its obligations."

The U.S., EU and Canada argued that the tariff was discouraging auto makers from using imported car parts for the vehicles they assemble in China. As a result, car-parts companies had an incentive to shift production to China, costing Americans, Canadians and Europeans their jobs, they said.

China, which can appeal the decision, claims the tariffs are intended to stop whole cars' being imported in large chunks, allowing companies to avoid the higher tariff rates for finished cars.