U.S. welcomes China move to cut auto parts tariffs

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WASHINGTON, Aug 28 (Reuters) - The United States on Friday welcomed Beijing’s decision to eliminate additional charges on imported auto parts after China lost a challenge on the issue at the World Trade Organization.

“We are pleased that China has informed us that it is eliminating the additional charges on imported auto parts in response to the WTO ruling. We look forward to carefully reviewing the changes announced by China,” U.S. Trade Representative Ron Kirk said in a statement.

“Ending these charges will help ensure a level playing field for the high quality auto parts made in America, and is an important example of the importance of enforcing our international trade agreement rights,” Kirk said.

China’s move to comply with the WTO ruling in the auto parts case came weeks before President Barack Obama is required to decide by Sept. 17 whether to restrict imports of Chinese-made tires in a trade case brought by union workers.

If Obama agrees, that could set the stage for China to bring its own complaint at the WTO. However, the union group says the United States is well within its rights under WTO rules to limit imports from China in response to a surge. The auto parts case dates back to March 2006, when the administration of former President George W. Bush was under pressure from Democrats in Congress to show it was serious about making sure Beijing was living up to the promises it made when it joined the WTO in December 2001.

As part of its accession, China agreed to lower trade barriers affecting the imports of autos and auto parts.

However, it subsequently adopted regulations that levied an additional charge on imported auto parts when the imported parts were incorporated into a final assembled vehicle that failed to meet certain local content requirements, USTR said.

All vehicle manufacturers in China that used imported parts also had to register with China’s Customs Administration and provide specific information about each vehicle they assembled, including a list of the imported and domestic parts to be used, and the value and supplier of each part.

If the number or value of imported parts in the assembled vehicle exceeded specified thresholds, the Chinese authorities assessed a 25 percent tax on each of the imported parts.

The charges unfairly discriminated against imported auto parts and put significant pressure on auto parts producers to move their manufacturing facilities to China, USTR said.

(Reporting by Doug Palmer; Editing by Doina Chiacu)

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