December 15, 2008
No. 244
The Honourable Stockwell Day, Minister of International Trade and Minister for the Asia-Pacific Gateway, today welcomed a ruling by the World Trade Organization (WTO) Appellate Body, which confirmed that China's practice of applying additional charges on imports of auto parts is inconsistent with its WTO obligations.
"Today's ruling is a win for the Canadian auto parts industry, because it ensures fair market access for our exports and will help maintain Canadian jobs in this important sector," said Minister Day. "It will enable Canadian auto parts manufacturers to be more competitive in China. We hope that China will act quickly to end its discriminatory practices with regard to imported auto parts."
China has been applying additional charges on imported auto parts above the 10 percent it committed to when it joined the WTO. This led to a situation where the charges on parts were essentially equivalent to the 25 percent tariff rate on imported complete vehicles, putting Canadian auto parts exporters at a disadvantage.
China is a major market for this key value-added sector of the Canadian economy. China's imports of Canadian auto parts have averaged $225 million annually over the last five years.
"Canada and China have a healthy and growing commercial relationship," said Minister Day. "China is a priority market for Canadian business, and we will continue to work closely with our partners to ensure open trade and investment."
In fall 2006, Canada, the United States and the European Union requested that a WTO panel rule on the legality of the Chinese measures. In July 2008, the panel ruled in favour of Canada, the U.S. and the EU, and today that ruling was upheld by the WTO Appellate Body.
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A backgrounder follows.
For further information, media representatives may contact:
Mélisa Leclerc
Director of Communications
Office of the Minister of International Trade and Minister for the Asia-Pacific Gateway
613-992-6186
Trade Media Relations Office
Foreign Affairs and International Trade Canada
613-996-2000
www.international.gc.ca/index.aspx
Backgrounder
Canada's WTO Challenge to Chinese Measures on Auto Parts
Current Chinese measures on auto part imports stipulate that when a car assembled in China is made up of certain combinations of foreign parts, the imported parts are assessed charges equivalent to the higher tariff rate for complete automobiles (typically 25 percent), rather than the tariff normally applied to auto parts (typically 10 percent).
On April 13, 2006, Canada requested consultations with China on that country's import regime for automotive parts. The United States and the European Union made the same request on March 30, 2006. Joint WTO consultations took place in May 2006, but those consultations did not resolve the issue.
On September 15, 2006, Canada, the United States and the EU requested the establishment of a WTO panel to deal with the matter. This was the first time that Canada had been a complainant against China in a WTO dispute. Third parties to the dispute were Japan, Argentina, Australia, Brazil, Thailand, Mexico and Chinese Taipei.
On July 18, 2008, the World Trade Organization issued its first panel decision in the dispute, siding with Canada, the United States and the EU. China appealed the decision to the WTO Appellate Body, which today upheld the original decision.
In 2007, Canadian exports to China amounted to $9.3 billion, making China Canada's third-largest export market. Imports from China amounted to $38.4 billion. China's imports of Canadian auto parts averaged $225 million annually between 2003 and 2007.
Further information about the Appellate Body ruling can be obtained from the WTO website at:
www.wto.org/english/news_e/news08_e/news08_e.htm.
