Volkswagen says China Should Join WTO but Not Through Sacrifice

09/19/96

Reuters reported that Martin Posth, a member of Volkswagen's board of management and chairman of Volkswagen Asia-Pacific Ltd., has said that China should join the World Trade Organization, but that it should not sacrifice its long term interests to join now.

Posth told an international business conference that "China's entry into the World Trade Organization is a must," but he also said that "entry into the WTO should not mean that China has to ignore its own economic interests."

"China should instead protect its developing industries... the automotive and its supply industry for a certain period." Western countries have insisted that China must lower its tariff and non-tariff barriers to trade in order to join the WTO.

Volkswagen is the main producer of cars in China and is concerned that China might agree to a sharp reduction in tariffs. Because it builds about 360,000 cars a year at its two joint venture plants in Shanghai and Changchun in the northeast, VW avoids current import duties on cars amount to about 110 percent of the car's value.

Posth has said previously that China needs to protect its car manufacturers and parts suppliers so that they can reach economies of scale that will allow them to compete with foreign manufacturers.

Paul Dever -- The Auto Channel