Canada Requests WTO Consultations on Chinese Treatment of Auto Parts

News Release

April 13, 2006
No. 37
International Trade Minister and Minister for the Pacific Gateway and the Vancouver-
Whistler Olympics David L. Emerson today announced that the Government of Canada
has officially made a request for World Trade Organization (WTO) consultations on
China’s treatment of imported auto parts. The United States and the European Union
have made similar requests.
“We are seeking clarification from China on its current auto part import regime, which
we believe contravenes a number of the country’s international trade obligations,” said
Minister Emerson. “Our goal is to work toward resolving this issue through dialogue with
the Chinese government and through cooperation with our trading partners.”
Under measures implemented by China on April 1, 2005, imported auto parts for use in
the assembly of complete vehicles are, in some circumstances, being assessed a
higher charge that normally applies to whole vehicles, rather than the tariff listed in
China’s WTO tariff schedule as applying to parts. The Government of Canada views
this practice as a violation of China’s WTO commitments.
The government will work closely with the other parties involved in finding a resolution
to this issue. If consultations do not succeed in resolving the issue, it could request the
creation of a WTO panel to adjudicate the issue.
Canada is a significant supplier of auto parts to China. China’s imports of Canadian
auto parts averaged $256 million annually between 2003 and 2005.
- 30 -
A backgrounder is attached.
For further information, media representatives may contact:
Jennifer Chiu
Press Secretary
Office of the Minister of International Trade and Minister for the Pacific Gateway and
the Vancouver-Whistler Olympics
(613) 992-7332
Media Relations Office
International Trade Canada
(613) 995-1874
http://www.international.gc.ca
Backgrounder
The Government of Canada has requested WTO consultations with China on that
country’s import arrangements concerning automotive parts. On March 30, 2006, the
U.S. and the EU also requested consultations on this issue. Japan joined the U.S. and
the EU in their requests for consultations on April 11, 2006.
Issue:
Current Chinese regulations on auto part imports stipulate that when a car assembled
in China is made up of certain combinations of foreign parts, those imported
components are assessed at a higher complete automobile tariff rate (typically
28 percent) rather than the tariff regularly applied to auto parts (typically 10 to
14 percent).
The government believes that this practice creates an additional cost bias in favour of
Chinese car part producers—one which contravenes a number of the country’s
international trade obligations under the WTO.
While the Government of Canada has requested WTO consultations in its own right, it
intends to work closely with other interested WTO members that have also requested
consultations with China on this issue.
Consultations represent the first stage in the WTO dispute settlement process. This
phase of the process allows parties to discuss the measures at issue with a view to
resolving their dispute outside of a formal adjudicative process. If parties fail to reach
agreement at this stage, a WTO panel can be requested to provide recommendations
or rulings on the issue.
Canada exported $7.1 billion of goods to China in 2005 and imported $29.5 billion
worth of goods.
Further information about the WTO dispute settlement process can obtained from the
WTO website at http://www.wto.org/english/thewto_e/whatis_e/tif_e/disp1_e.htm.

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Canada Requests WTO Consultations on Chinese Treatment of Auto Parts

News Release

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