Auto Parts Consultation "Results"

â–  China, the United States and Europe have no indications of concession â–  The dispute is likely to further escalate

After nearly 60 days of negotiations, the Auto Parts dispute between China and the United States and Europe is likely to be further upgraded. Yesterday, Jia Xinguang, chief analyst of China Automotive Industry Consultation and Development Co., revealed to reporters that according to information received from his industry, it is unlikely that China, the United States, and Europe will resolve the auto parts dispute in the final stage of the negotiations, because neither side showed any concession. The dispute may take a long time and enter the WTO legal process.

[According to WTO Rules] 60 Days of Negotiations Only 4 Days Left

The 60-day consultation period that began on March 30 will end on May 29. In the last 4 days, the possibility of agreement between all parties in China, the United States, and Europe is already small. Ray Wenkai, deputy head of the US Department of Commerce responsible for international trade, said this week that the current pressure for negotiations is mainly on the Chinese side. They still believe that it is best to solve problems through informal legal channels. U.S. Deputy Trade Representative Bhatia said that the United States believes that China’s policy on importing auto parts and components violates the WTO rules. If it cannot succeed in the negotiation stage, the United States will require the WTO to establish an investigation team.

In response to US and European requirements, Chinese Minister of Commerce Bo Xilai met with German Minister of Economy and Technology Gros Ross this week and said that China’s auto parts import policy is aimed at cracking down on the illegal assembly of cars in China, not for foreign products. .

According to WTO rules, the United States, the European Union and China have a 60-day consultation period before requiring the WTO to investigate and make a ruling on China's auto parts import policy. During this period, parties can resolve disputes through consultation. Although the consultation period will end on May 29, it is widely expected in the industry that the United States and the European Union may wait until mid-June to submit a request to the WTO for the establishment of an expert panel to conduct investigations.

[China does not make concessions] It concerns the long-term development of the automotive industry

“The possibility of successful negotiations is relatively low. In terms of auto parts policy, China’s attitude is very tough. At the same time, Europe and the United States will not make concessions when the situation is more favorable.” Yesterday, Jia Xinguang said in an interview with reporters. Both Europe, the United States, and China are unwilling to make concessions on parts and components policies, not focusing on short-term benefits, but on long-term strategic considerations. In the short term, many domestic parts and components purchase costs have fallen below the international level, and the increase in localization rate is currently a more cost-effective business for most car dealers. However, in the long run, the interests of all parties are inconsistent. China’s fear of abandoning component tariff policies will likely affect the enthusiasm of multinational companies in localizing high-end products in China, and is not conducive to the long-term development of the automotive industry.

Without waiting for policy changes, multinational corporations began to make long-term plans to shift from stopping domestic production of related products to adjusting product mix. Yesterday, relevant persons of Shanghai GM revealed to reporters that despite Cadillac's suspension of domestic production this year, Shanghai General Motors will introduce a Cadillac that can meet localization standards next year. BMW said that it will increase the production of domestic products and increase the localization rate to cope with the risks brought about by the policies. From the Mercedes-Benz internal news, Beijing Benz Jeep production has been temporarily suspended.

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