China expressed regret on Friday over a complaint the US and the EU have jointly filed with the World Trade Organization (WTO) over China's tariffs for car imports.

 

The two accused China of violating its commitments to the WTO by imposing a discriminatory tariff regime on foreign car parts and whole cars.

 

They have asked China to take part in discussions about the issue at the WTO in Geneva.

 

"China expresses regret (over their decision)," the Ministry of Commerce (MOFCOM) spokesman Chong Quan said in a statement posted on the ministry's website.

 

"China is earnestly studying the demand for talks by the EU and the US," the statement said.

 

The complaint centers on tariffs for whole vehicles and for imports of spare parts making up 60 percent or more of the value of a final vehicle.

 

According to the rules implemented last April, an average tariff of 30 percent is collected from imported whole vehicles, while the figure for auto parts is 15 percent.

 

The European Commission said in a statement on its website that this may contravene China's WTO obligations because to avoid the whole car tariff rate a carmaker has to source at least 40 percent of its parts in China.

 

"What the Chinese policy does is favoring its domestic industry or forcing US companies to relocate to China to avoid these illegal taxes," US Trade Representative Rob Portman told local reporters. "We have tried and failed to resolve our differences," he added.

 

China's rules on auto part imports were introduced to encourage foreign carmakers to produce key parts in China,

 

But they have led to complaints mainly from manufacturers of high-end vehicles, such as BMW and Mercedes Benz, which do not currently manufacture parts, such as engines, in China.

 

China had the right to realize a development target for its domestic industry with policies, said Mei Xinyu, a trade expert with the Chinese Academy of International Trade and Economic Cooperation, a think tank with MOFCOM.

 

"Certain regulations meet WTO rules," he said.

 

He explained that the WTO prohibited obligatory rules about using products made in specific places, or on the proportion of imported products used in the manufacturing process.

 

According to the WTO regulations, discussions are a procedural step that allows all parties to clarify legal issues and seek a constructive solution.

 

If both parties cannot reach an agreement during the maximum 60-day consultation period, they have the option of requesting a WTO panel to hear and rule on the dispute.

 

Such disputes at the WTO usually take two to three years to decide.

 

China has faced only one such case at the WTO, which was filed by the US over semiconductors.

 

(China Daily April 1, 2006)