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China to cut tariff on cars, auto parts

China, in a move to meet its WTO commitment, will further cut import taxes on some cars and auto parts as of July 1, the Ministry of Finance announced Thursday.

With the approval of the Chinese government, the Customs Tariff Commission of the State Council, has decided to lower the tariffs on cars, SUVs (sports utility vehicles or cross-country vehicles), and mini-buses from 28 percent to 25 percent, said the ministry.

Meanwhile, the import taxes on auto parts, such as auto bodies, underpans, medium and low emission gasoline engines, will be reduced to 10 percent from a range between 13.8 percent and 16.4 percent.

The move was made to comply with the country's commitments on tariff reduction upon its entry into the World Trade Organization (WTO) in 2001.

The latest tariff cuts came only six months after China slashed import tariffs on more than 100 categories of products beginning January 1, 2006, involving vegetable oil, raw chemical materials, automobiles and parts.

The import tariff rate for sedans, mini-buses and cross-country vehicles was lowered from 30 percent to 28 percent since January 1, while that for auto parts such as gear boxes, absorbers, radiators, clutches and steering gears was cut from 13.5 percent to 10 percent.

Up to now, China has fully complied with its automobile-related tariff cut commitments upon its WTO accession, said the ministry in a statement.

The European Union (EU) and the United States have filed request to China for talks with China on auto parts tariffs under the WTO trade dispute settlement mechanism.
The EU complained that some of China's rules on car import tariffs are not in accordance with WTO rules, putting their car manufacturers at a disadvantage compared to local producers.

China announced in early April it has accepted a request from both the European Union and the United States for talks with China on auto parts tariffs under the WTO trade dispute settlement mechanism.

In responses to the request, Cong Quan, spokesman for the Chinese Ministry of Commerce, expressed regret on the EU's plan to file a WTO complaint against China's rules over imports of auto parts.

China said its taxes are aimed at curbing tax evasion by some foreign auto manufactures, saying that some of them disassemble their cars before importing and then reassemble them in the country thereby avoiding customs payments on importing whole cars.

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