WTO Panel Rules Against Chinese Tariff On Imported Auto Parts

Copyright 2009, Blake, Cassels & Graydon LLP

Originally published in Blakes Bulletin on International Trade & Investment–China Focus, January 2009

On July 18, 2008, a World Trade Organization (WTO) dispute settlement panel found that China's tariff on imported auto parts violated WTO law, in particular, the General Agreement on Tariffs and Trade (GATT). The panel also found that the tariff contravened the scheduled tariff commitments China had promised as part of its 2001 WTO accession agreement to increase access to its automobile market and not to treat parts as whole cars.

Central to the dispute was a 2005 Chinese regulation that imposed a 60% local content requirement on all domestically produced automobiles. Part of China's WTO accession package set a maximum tariff of 25% on imported whole vehicles and a maximum tariff of 10% on imported auto parts. However, the 2005 Chinese regulation imposed a 25% tariff on auto parts if the parts constituted 40% or