Transcript DS340 China — Measures Affecting Imports of Automobile Parts

World Trade Organization DS340
China-Measures Affecting Imports
of Automobile Parts
Andrea Currie
Chad DeHartchuck
Leysan Dickenson
Business & Political Context
• China’s Accession to the WTO: 11 December 2001
• China Agreed to Fair Commitments in Trade
• Other WTO Members Seek Fair Treatment of their Automobile
Parts & Products in China
Dispute Proceedings
• Pursuant to Articles 1 and 4 of the Understanding on Rules and
Procedures Governing the Settlement of Disputes, Article XXII of
the General Agreement on Tariffs and Trade 1994 (GATT), the
United States submits a Request for Consultations, 30 March 2006
• Under Article 6.2 of the DSU, the United States circulates its
Request for the Establishment of a Panel, 15 September 2006
• On 26 October 2006, the DSB Establishes a single Panel at the
Requests o the European Communities, the United States and
Canada
• On 18 July 2008, the DSB Panel Issues its Report Regarding ChinaMeasures Affecting Imports of Automobile Parts
Final Appellate Proceeding
• Under Articles 16.4 and 17 of the Understanding on rules and
Procedures Governing the DSU and Under Rule 20(1) of the
Working Procedures for Appellate Review, the People’s
Republic of China Issues a Notification of Appeal on 15
September 2008
• On 15 December 2008, the DSB Issues an Appellate Report
Regarding China-Measures Affecting Imports of Automobile
Parts
Main WTO Issues
 National Treatment
 Agreements Cited
 GATT Agreement
 TRIMS Agreement: Articles 2
 SCM Agreement
 Was China charging automobile parts inconsistently with
other members sold from overseas?
Position: European Communities
 Argued that the sale of automobile parts manufactured for
sale in China were subject to charges equal to tariffs imposed
on complete vehicles.
 Inconsistent with:
 GATT 1994
 TRIMS Agreement
 Article 2
 Article 3 of Subsidies and Countervailing Measures
Agreement
 Prohibition of subsides
 China’s Accession Protocol
 Part 1, Paragraph 7.3
Position: United States
 Claimed that manufacturers were penalized for using
auto parts in the manufacture of automobiles for sale in
China
 Inconsistent with




TRIMS Agreement: Article 2
GATT Agreement: Articles 2 and 3
SCM Agreement: Article 3
The Protocol of Accession
 Parts I.1.2 and I.7.3, and paras. 93 and 203
Position: Canada
 Argued that different charged were imposed on
manufacturers and received an advantage if they used
domestic produced parts
 Inconsistent with:





Protocol of Accession
GATT Agreement: Articles 2 and 3
TRIMS Agreement: Article 2
SCM Agreement: Article 3
Agreement on Rules of Origin: Article 2
Position: China
 Erroneous interpretation of GATT 1994
 Article II
 Failed to take into context the Harmonized System
 Custom duties authorities determine:
 What is the product
 The corresponding duties
Decision
 October 26, 2006
The WTO established a dispute settlement panel.
This was the first time that the WTO had established
a panel to review the WTO-consistency of a Chinese
measure.
 July 18, 2008
The WTO dispute settlement panel found that China's
additional charge on imported auto parts unlawfully
discriminated against U.S. auto parts under WTO
rules.
Decision
 September 15,2008
China notified about its decision to appeal to the
Appellate Body
 December 15, 2008
After an appeal filed by China, Appellate Body
confirmed the findings of the WTO Panel
Implementation
 27 February 2009
Communication from Delegation of China and the
delegation of the United States to the Chairman of
the Dispute Settlement Body:
“Reasonable period for implementation shall be 7
months and 20 days from the date of adoption of the
DSB recommendations and rulings”
Implementation
 28 August 2009
The General Administration on Customs and
relevant agencies had promulgated a joint decree
to repeal Decree 125
 31 August 2009
China informed the DSB that on 15 August 2009, the
Ministry of Industry and Information Technology, and
National Development and Reform Commission, had
issued a joint decree to stop the implementation of
relevant provisions concerning the importation of auto
parts in the Automobile Industry Development Policy
US Reaction
 August 28, 2009
The United States welcomed Beijing's decision to
eliminate additional charges on imported auto parts in a
landmark case that ended a grace period for China after
it joined the World Trade Organization.
 "We are pleased that China has informed us that it is
eliminating the additional charges on imported auto
parts in response to the WTO ruling. We look forward to
carefully reviewing the changes announced by China,"
U.S. Trade Representative Ron Kirk said in a statement.
Outcome for the US
 China's move to comply with the WTO ruling in the auto
parts case came weeks before President Barack Obama
was required to decide by Sept. 17 whether to restrict
imports of Chinese-made tires in a case brought by
union workers.
 If Obama imposed restrictions, that could set the stage
for China to bring its own complaint at the WTO.
Outcome for the US
 First Case Lost by China
 Ended China’s grace period
 Motor-vehicle manufacturing directly and indirectly
supports 1.6 million jobs
 China practices of before DS340 case hurt employment
in these auto parts sectors.
 US stance on China has been consistent throughout the
past two administrations regarding WTO violations
Outcome for the US
 Auto parts sector employment dropped 10.2 percent in
2008 to 604,000 and 23 percent more in 2009 to
464,000. Employment stabilized in 2010 and increased
for the first time in over a decade to 487,000 in 2011.
 China’s auto parts exports to the United States have
increased 43 percent from 2004 to 2009
 Automotive parts imports from China declined slightly in
2009, but are expected to increase again
 Numbers are according to U.S. Automotive Parts
Industry Annual Assessment, International Trade
Administration
Outcome for the US
 Other cases were filed, for example DS440, AntiDumping and Countervailing Duties on Certain
Automobiles from the United States
 13 cases filed against China by the U.S. since the first
case
 Countries avoided bringing complaints against China
during the first five years of its membership in the WTO
to give it time to adjust to world trade rules.
Recommendation for US
 China’s automotive aftermarket is expected to continue
to grow at an annual rate of 40 percent, as the market
increases for both new and used autos
 The Chinese government’s emphasis on developing
electric vehicles and other types of alternative energy
vehicles could also be an impetus for its industry to lead
the development of this new product market
 US has to continue to monitor the practices of China is
developing new technologies and make sure that they
are not violating WTO rules.
China’s Recommendation
All parties agree to the same rate of subsidy, if
the industry is considered an infant industry for
China.
China’s domestic policy makers are tasked with
balancing their WTO obligations with their
domestic automobile manufacturers.
Sources
 http://www.wto.org/english/tratop_e/dispu_e/cases_e/ds340_e.
htm
 http://www.wto.org/english/docs_e/legal_e/gatt47_01_e.htm
 http://www.wto.org/english/docs_e/legal_e/18-trims.pdf
 http://www.wto.org/english/docs_e/legal_e/24-scm.pdf
 http://www.wto.org/english/docs_e/legal_e/legal_e.htm#finalac
t
 http://www.wto.org/english/docs_e/legal_e/03-fa.pdf
 http://www.worldtradelaw.net/misc/chinaaccessionprotocol.pdf
 http://www.ustr.gov/archive/assets/Document_Library/Reports_
Publications/2005/asset_upload_file293_8580.pdf
 https://docs.wto.org/dol2fe/Pages/FE_Search/FE_S_S006.aspx?Q
uery=%28%40Symbol%3d+wt%2fds340%2f*%29&Language=ENGLISH&
Context=FomerScriptedSearch&languageUIChanged=true
Sources
 http://www.trade.gov/mas/manufacturing/oaai/build/group
s/public/@tg_oaai/documents/webcontent/tg_oaai_003753.p
df
 http://www.trade.gov/mas/manufacturing/oaai/static/Auto%
20Parts%20Paper%202012%20final_Latest_tg_oaai_003966.pdf
 http://www.wto.org/english/tratop_e/dispu_e/cases_e/ds34
0_e.htm
 http://www.ustr.gov/about-us/press-office/pressreleases/2009/august/ambassador-kirk-comments-regardingchina-and-auto-p
 http://www.epi.org/publication/bp336-us-china-auto-partsindustry/
 http://www.autonewschina.com/en/printarticle.asp?id=3217
Picture Sources
 https://www.cia.gov/library/publications/the-worldfactbook/geos/us.html
 https://www.cia.gov/library/publications/the-worldfactbook/geos/ch.html
 http://www.proeurope.org/content/delta2/EU_Flag.jpg
 https://www.cia.gov/library/publications/the-worldfactbook/flags/flagtemplate_ca.html
 http://automotivepartsz.info/2013/02/warehouse-autoparts.html
 freedomismist.blogspot.com