WORLD TRADE  
ORGANIZATION  WT/DS340/1 
G/L/771 
G/TRIMS/D/23 G/SCM/D68/1 
3 April 2006 
 
 
(06-1544) 
 Original:   English 
 
  
CHINA – MEASURES AFFECTING IMPORTS OF AUTOMOBILE PARTS 
 
Request for Consultations by the United States
 
 
 
 The following communication, dated 30 Marc h 2006, from the delegation of the United States 
to the delegation of China and to the Chairman of  the Dispute Settlement Body, is circulated in 
accordance with Article 4.4 of the DSU. 
 
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  My authorities have instructed me to request  consultations with the Government of the 
People's Republic of China 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 1994"), Article 8 of the Agreement on Trade-Related Investment Measures  
("TRIMs Agreement") (to the extent that Article  8 incorporates Article XXII of the GATT 1994), and 
Articles 4 and 30 of the Agreement on Subsidies and Countervailing Measures  ("SCM Agreement") 
(to the extent that Article 30 incorporates Article  XXII of the GATT 1994) with respect to China' s 
treatment of motor vehicle parts, components, and accessories ("auto parts") imported from the United States.     China's regulations governing the importation of  auto parts appear to penalize manufacturers 
for using imported auto parts in the manufacture of vehicles for sale in China.  Although China bound 
its tariffs for auto parts at rates significantly lowe r than its tariff bindings for complete vehicles, we 
understand that China assesses a charge on imported auto parts equal to the tariff on complete vehicles, if the imported parts are incorporated in a vehicle that contains imported parts in excess of 
specified thresholds.  To the extent that the charge  is applied when a vehicle is manufactured within 
China, it would appear to constitute a tax on impor ted auto parts not imposed on like domestic auto 
parts.  The tax also appears to be applied in a manner so as to afford protection to domestic products. 
  To the extent that the charge is imposed upon the importation of the auto parts, it appears to 
constitute a charge in excess of those set forth in  China's Schedule of Concessions and Commitments.  
Further, to the extent China may be viewed as imposing a lesser tariff on imported auto parts if the 
final assembled vehicle contains specified amounts of  local content, it would be forgoing revenue 
otherwise due, and China would app ear to be providing a subsidy con tingent upon the use of domestic 
rather than imported goods.  A statement of available evidence with regard to the existence and nature 
of the subsidy is attached.   Further, China's regulations specifically identify completely knocked down (CKD) and 
semi-knocked down (SKD) kits and appear to assess them the tariff for complete vehicles.   
 WT/DS340/1, G/L/771,  
G/TRIMS/D/23, G/SCM/D68/1 Page 2 
 
 
   The measures through which China h as provided such treatment include:  
 
• Order No. 8 of the National Development and Reform Commission (21 May 2004), Policy on 
Development of Automotive Industry ;  
 
• Decree 125 (1 April 2005), Measures for the Administration of Importation of Automotive 
Parts and Components for Complete Vehicles; 
 
• Customs General Administration Public A nnouncement No. 4 (1 April 2005), Rules for 
Determining Whether Imported Automotive Part s and Components Constitute CBU Vehicles; 
 as well as any amendments, related measures, or implementing measures.   
 
 These measures appear to be inconsis tent with the following provisions: 
 
• Article 2 of the TRIMs Agreement; 
 
• Articles II (including paragraph 1) and III (inc luding paragraphs 2,  4, and 5) of the 
GATT 1994; 
 
• Article 3 (including paragraphs 1 and 2) of the SCM Agreement; and 
 
• The Protocol on the Accession of the People's Republic of China (WT/L/432) (including 
Parts I.1.2 and I.7.3, and Paragraphs 93 and 203 of the Working Party Report 
(WT/MIN(01)/3)), which is an integral part of the Marrakesh Agreement Establishing the 
World Trade Organization .   
 
China's measures also appear to nullify or impa ir the benefits accruing to the United States 
directly or indirectly under the cited agreements.   We  look forward to receiving your reply to th e present request and to fixing a mutually 
convenient date for consultations. 
  WT/DS340/1, G/L/771,  
 G/TRIMS/D/23, G/SCM/D68/1  Page 3 
 
 
  Statement of Available Evidence
 
  
• Order No. 8 of the National Development and Reform Commission (21 May 2004), Policy on 
Development of Automotive Industry ;  
 
• Decree 125 (1 April 2005), Measures for the Administration of Importation of Automotive 
Parts and Components for Complete Vehicles; 
 
• Customs General Administration Public A nnouncement No. 4 (1 April 2005), Rules for 
Determining Whether Imported Automotive Part s and Components Constitute CBU Vehicles. 
 
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