As soon as the final ruling in March loses, the domestic production of luxury cars and commercial vehicles will benefit in the short term
This is the first time in seven years since China’s accession to the WTO that it has lost the lawsuit. It is about cars.
On February 13, local time in Geneva, Switzerland, a complaint initiated by the United States, the European Union, and Canada regarding China’s auto parts import policy was finalized. The dispute settlement team consisting of three foreign members found that China’s high tariff policy on imported auto parts violated China’s commitment to China’s accession to the WTO and the Chinese side lost the case.
The core of the problem: How large is the import tariff of large parts?
The trade disputes initiated by the above-mentioned three major interest groups are actually dissatisfied with the Measures for the Administration of the Import of Auto Parts that Constitute the Characteristics of Complete Vehicles (hereinafter referred to as the “Measuresâ€) promulgated by China on April 1, 2005. At that time, in order to curb the practice of foreign-invested auto giants only installing four wheels on Chinese-made cars, the Chinese government formulated a set of standards for the import management of components and parts that characterize the entire vehicle, and stipulated that the imported parts and components that make up the characteristics of the whole vehicle will be fully implemented. The amount of vehicle import duties is levied. At that time, the tariffs for parts and components changed from 13.8% to 16.4% to 28%. The EU, the United States, and Canada have stifled China's practice as trade discrimination.
At the earliest in November 2005, the EU wanted to complain to the WTO about the import mechanism of China's auto parts, and then the EU, together with the United States and Canada, formally filed a complaint with the WTO. The complaint subsequently took a series of ups and downs. Before the preliminary ruling on February 13, 2008, China’s General Administration of Customs and the Ministry of Commerce announced on the website on July 5, 2006 that the “measures†were delayed until July 2008. It will be implemented again on the 1st. The dispute has only come to an end since then.
Who is affected: Only domestic luxury cars and commercial vehicles are affected
The Chinese government's delay in the management of imported parts does not mean that the foreign automakers will be allowed to “pass†on four wheels of fake domestic production in China.
According to an interview with a reporter from Huangpu Customs, in a number of cases in which he personally approached the import of auto parts, he had dealt with a large number of imported parts of Guangzhou Isuzu that constituted the characteristics of the vehicle. In addition, Mercedes-Benz's light vehicle base in Fuzhou has been approved by the Ministry of Commerce in October 2007 until it was approved in 2001. An insider of the Mercedes-Benz Fuzhou Light Vehicle Base stated in an interview that the six-year period in which the EU’s provocative dispute over China’s imported parts and components policy directly affected their approval process.
The above two cases concerning the import policy of parts and components are in fact one or two representatives of China’s views on the component import policy.
Since most of the joint venture companies represented by Japanese manufacturers have already achieved the localization of parts and components, these joint venture companies said in interviews with reporters that there will not be much fluctuation. Taking Guangzhou Honda as an example, the localization rate of its major models has exceeded or approached 90%, so the component import policy has little impact on it. The direct impact is mainly on Mercedes-Benz, BMW, Volvo, Cadillac and other luxury cars and young Neoplan luxury passenger cars, Guangzhou Isuzu and other commercial vehicles. As the localization of luxury auto parts is much more difficult than the average model, it is affected by the small quantity of parts and components, and the high quality requirements, so they are very difficult to go on the road to localization, and domestic production in China still depends on large parts. The way of import is assembled in the country.
Jin Yongsheng, a senior analyst at Xinhuaxin, said in an interview with reporters that in the short term, if the parts import management policy is “releasedâ€, the domestic production of these luxury cars will greatly benefit in the short term. However, in the long run, they are still expected to gradually increase the localization of parts and components in China in order to reduce costs.
Two questions
Will the final judging result in March be changed?
According to WTO rules, once a judgment is issued, if China refuses to change the relevant policies, the appealing country and region will have the right to impose sanctions on China. However, Song Hao, director of the International Trade Research Office of the Institute of World Economics and Politics at the Chinese Academy of Social Sciences, believes that the chances of changing the verdict are negligible. “So far, no dispute resolution team has made a final decision that is inconsistent with the preliminary ruling.†However, in March, Before the final ruling was issued, it still cannot be concluded.
Is it specific to my car?
Jin Yongsheng, a senior analyst at Xinhuaxin, said in an interview with reporters that due to the relatively small number of luxury cars made in China, the amount of disputed import duties is not significant. On the whole, this may be the EU, the United States, etc., using China's spare parts policy as an excuse. In China and their complex and large trade disputes, they talk about the auto parts policy.
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