On December 15th, the World Trade Organization (WTO) rejected China’s appeal against an automobile parts dispute in favor of the United States, the European Union, and Canada. The WTO clearly stated that China's policy of restricting the import of foreign-made auto parts is trade protectionism. It is reported that this is the first time China has lost the trade dispute since it joined the organization in 2001. The WTO Appellate Body also recommended that China adjust the import tariffs on foreign auto parts to the level that meets the international trade rules.
According to Ren Yifeng, deputy secretary-general of the World Trade Organization Research Association of China, in general, the decision of the appeal is the final result. The reporter interviewed the automobile analyst Xiang Hansong about this matter, he thought "the losing case is not a big deal."
It is very common to go to court in the WTO
The key to disputes lies in the “Measures for the Administration of Imports of Auto Parts that Constitute the Characteristics of Complete Vehicles†(hereinafter referred to as “Measuresâ€) implemented by China from April 1, 2005, which stipulates that imports should be equal to or exceed the zero value of 60% of the total vehicle value. For parts, the same tariff as the entire vehicle is collected, which is 25%; and the import tariff for parts and components is 10%, a difference of 15% between the two. Officials from the Ministry of Commerce pointed out that the “measures†were implemented to prevent lawbreakers from using the tax difference between the entire vehicle and parts to evade tariffs. The United States, the European Union, and Canada believe that the above tariff regulations reduce the cost of auto parts makers' production transfer to China, causing the United States, Canada, and Europeans to lose their jobs.
This incident caused an uproar in the industry. The Ministry of Commerce spokesman Yao Jian immediately issued a statement the next day, stating that the WTO appeals agency's appeal for China’s appeals in respect of imported auto parts/parts and semi-completed sets of import tariffs, etc., corrected the previous error of the expert group. The ruling said that the Chinese side welcomes this, but at the same time, it also regrets that the Appellate Body has maintained the rulings of other parts of the Group of Experts.
Auto analysts believe that Han Song, this is just a very common case in the WTO organization, just because everyone has paid more attention to the automotive industry in recent days, this makes the "lost case" is particularly prominent, "in the WTO organization, Japan and The United States has been fighting for more than 20 years and has not yet reached a conclusion. Now that Japanese cars are selling the best in the United States, losing the lawsuit is not a worthwhile issue. How to resolve disputes is the key."
Luxury car prices or down?
Careful observation of the original defendants of the lawsuit can be found in the fact that the plaintiff is in fact a luxury car brand represented by BMW and Mercedes-Benz. In fact, the matching of high-end cars such as BMW and Mercedes-Benz is difficult to achieve 40% of domestic components. Once the WTO decides that the Chinese government cancels the threshold for localization, the luxury brands will further reduce the tax rate in the procurement sector. To reduce costs, the prices of imported cars in China will also be further lowered.
However, at present, the WTO has not made a final conclusion. According to relevant procedures, the judgment of the Appellate Body will be approved by the WTO Dispute Settlement Body within 30 days and will take effect. After the verdict comes into effect, China must amend the non-compliance measures within a certain period of time. This period will be determined through the parties' negotiation or arbitration by the WTO.
Zhang Xiaoyu, vice president of the China Federation of Machinery Industry, said that even if the original policy is cancelled after losing the lawsuit, it will not have a major impact on domestic auto makers. At present, domestic auto makers have more localization, and most companies that are domestically produced are With the introduction of technology, it can also reach 40% localization requirements.
“For luxury car brands, the original import can not only maintain the brand's influence, but also guarantee the original quality. If we can reduce the tax rate, it will be of great benefit to them. But it is undeniable that the current Chinese tax rate is in line with international standards. The ratio is already very low, and the Chinese government will not easily make concessions,†said Han Song. “The final result may be that the Chinese government negotiates with luxury brands, and the Chinese government may make concessions on the issuance of import licenses. â€
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Improve the overall level of the parts industry is the key
Experts believe that although the "Measures" themselves are designed to prevent lawbreakers from using the tax difference between vehicles and spare parts to evade tariffs, he stressed: "In this incident, we should recognize that our country has laws, regulations and regulations. Weak, the government must strengthen the study of WTO regulations and do not allow others to find a way out."
In addition, if the "Measures" are cancelled, it will also provide great convenience for overseas parts and components companies to penetrate into China, and it may spread to many local parts and components companies.
Some experts have suggested that the overall level of China's component manufacturers is not high, which is a fact, and it has not formed a true industrialization and large-scale development. This is a key point that domestic component manufacturers cannot compete with foreign component manufacturers.
At present, many joint venture companies choose to manufacture large parts suppliers in China. However, for luxury car brands, they believe that the quality of these parts cannot be passed. China's parts and components companies are generally thin, small workshop production, low technological content and technological level behind, only to really improve the technical level, the formation of industrialization, large-scale, only with the ability to compete with overseas parts suppliers. To Han Songsong: “Our government needs to do more than just 'defend', but rather it should be 'protect'. Only by vigorously developing and improving the overall innovation capability of domestic independent auto parts companies can we make local The enterprise has defensive capabilities."
Reporter observes: China is the last treasure of European and American car companies
When the reporter saw the news that “China’s spare parts had lostâ€, the first reaction was that foreign car companies were again “finding outâ€. In the past two months, the “financial turmoil†swept the financial industry and gradually penetrated into the physical industry. The auto industry will inevitably be greatly affected by this storm. The global sales report of major markets in November can be seen that almost all of the sales in the global market have declined in different degrees, while China has only slowed down its growth rate and has not yet experienced fatigue.
Therefore, although the "Measures" do have some adjustments in certain regulations, this is not a real threat to Europe and the United States. What they really worry about is the rapid rise of Chinese auto parts and components' competitiveness in global trade, which will make their own interests in the auto industry engulfed by China. Only by further lowering prices can we compete with China's low-cost, low-power companies.
And China is the last treasure in the depressed global market. How to hold onto the position and expand the market is an issue that foreign auto makers are worried about. And we must not make a mess because of a lawsuit.
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