EU urges China To Ease 50% Stake Limit On Auto JV

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Shanghai, November 11, 2008: ( Global carmakers are demanding more from China's auto industry after the World Trade Organization's July ruling against the Chinese tariffs on auto-parts imports, said today.

At a recent auto industry forum in Shanghai, Ivan Hodac, secretary-general of the European Automobile Manufacturers Association (ACEA), said that the European Union (EU) expects China to ease the restrictions on vehicle import certifications and 50:50 joint ventures in addition to following the WTO principle about auto-parts imports.

Ivan Hodac expressed that China's 3C quality standards have increased the costs of global vehicle imports to China and damped the sales of imported cars in the Chinese market. The restriction that a global automaker can have no more than 50% stake in its joint venture in China should be eased or lifted as well, said the ACEA secretary-general, adding that he hoped these policies can be soon made more favorable to the operations and sales of global automakers in China.

In response to these "excessive" demands, a Chinese expert said that China's auto import standards and certification system must be strictly enforced to guarantee the safety and interest of Chinese customers and to safeguard the country's environment and security. Low-quality imports will be denied access to the Chinese market anytime.

As to the 50:50 joint venture rules, the expert stressed that it should not be broken for the time being when the Chinese auto industry is not powerful enough to rival the global auto giants.

on July 18, The WTO said it had ruled against China in a complaint brought by the United States over Chinese import tariffs on car parts. The WTO's dispute settlement panel urged China to bring what it termed "inconsistent measures ... into conformity with its obligations."

China has a minimum local content requirement of 60 percent for domestically produced cars. If this level is exceeded, it then levies the same tariff on the vehicle as it would if it were imported completely built.

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