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China:Dispute over Auto Part Tariffs Ends in no Deal

NO agreements were reached between China, the European Union and the United States in talks over tariff disputes on imported auto parts yesterday - the final day for the negotiations.

Zhong Na, a media official from the EU's representative office in Beijing, confirmed no accord was released yesterday, 60 days after the EU called on China to start talks on the unfair tariffs at the end of March. China¡¯s Ministry of Commerce was unavailable for comment.

"No agreements did not mean that the talks have broken down without any chance to turn around," said Zhang Boshun, secretary of Market Commission of the China Automobile Association Manufacturers.

Besides the EU and the United States, Canada is still in talks with China that are expected to end around June 11.

Zhang added that "the EU is likely to wait for more countries to submit their complaints to a World Trade Organization panel to hear and rule on the dispute" if the parties failed to work out a solution through talks.

The dispute arose when the EU viewed that China had violated trade agreements by applying an excessive 18 percent tariff on imports of components.

The move may force foreign automakers to source Chinese-made car components or drive auto-part makers to shift their production to China.

Minister of Commerce Bo Xilai reiterated last week during a visit by high ranking officials from Germany that the tariff aims to curb illegal assembly and tax evasion and not to prevent foreign ca rmakers from producing in China.

Some foreign companies used to import a huge amount of spare auto parts and have them assembled in joint ventures to make quick profit in China.

According to a senior official from CAAM, if China were forced to scrap the different tax levels, other measures would be taken.

Such measures include stricter requirement for approving new joint ventures in the future and revoking approval for models that could be sold in China.

"The best approach we think is for everybody to try to resolve it without going through a formal legal process," said US Commerce Under Secretary Franklin Lavin, according to Reuters.