China
has postponed by two years a plan to impose higher tariffs on some imported auto
parts to help solve an auto industry trade dispute with the European Union and
United States. The
plan now won't go into effect until July 1, 2008. The
tariff rates - as high as 28 percent - drew complaints from the EU and US, who
said they would force automakers to source more from China. China
insisted the rules were aimed at curbing tax evasion. The
new announcement came after the second round of negotiations between the three
parties. "This
may be considered a temporary compromise by the Chinese government with the basic
principles still intact," said Zhang Boshun, general secretary of the China
Association of Automobile Manufacturers Market and Trade Commission. "The
extended period will create a win-win situation for both parties and help luxury
carmakers including Mercedes-Benz, BMW and Volvo to deepen localization."
The EU and
US could turn the tariff conflict to the World Trade Organization for arbitration
if no agreement is finally reached. According
to the postponed rules, imported auto components consisting of more than 60 percent
of the value of a vehicle would be hit with a tariff of 28 percent, the same tariff
as on completed new cars. Otherwise
the spare parts would be charged 10 to 14 percent.
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