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The solution proposed by Ivan Horditch is: I hope the "Measures" can consider the difference between the localization of different models, such as the new car to 2 to 3 years of "tolerance time"
“Arbitration through the WTO is the last resort. We still hope that we can resolve it through negotiation and diplomacy.†On November 28, Ivan A.F. Hodac, secretary-general of the European Automobile Industry Association, talked about China and Negotiations on the import and export of auto parts are told in the "First Financial Daily".
The European Association of Automobile Manufacturers (ACEA) is an interest group formed by 13 European automakers. It represents the interests of the European automotive industry throughout the European level. Its members produce a total of 16 million cars per year and employ more than 1.1 million people. Earlier this year, the European Automobile Industry Association opened a representative office in Beijing and began to lobby and communicate on the interests of the European automotive industry.
Ivan Hordach has served as Secretary-General of the European Automobile Industry Association since September 2001. This time, he came to China as a guest speaker at the "2005 Auto Industry Summit" sponsored by the China Europe International Business School. On the other hand, he lost no time in drumming the interests of European car manufacturers.
European disaster
At the 20th China-EU Economic and Trade Mixed Committee held on November 4th, EU Trade Commissioner Peter Mandelson had difficulty in China's "Administrative Measures for the Import of Auto Parts That Constitute Vehicle Characteristics" (hereinafter referred to as "Measures").
The EU’s eruption stems from the following provisions of the “Measuresâ€: “1. The imported CKD or semi-divided (SKD) assembled car, the imported vehicle body (including the cab), and the two engine assemblies are loaded; 2. One of the two major assemblies and the other three assemblies above the loading capacity; two assembly assemblies and other five assemblies above the loading capacity; 3. The sum of the prices of imported components reaches the total price of the vehicle. 60% and above.†Satisfying the above conditions, will soon be approved as an imported component that constitutes the characteristics of the vehicle. The customs will classify the vehicle and collect the customs duty and import value added tax at the vehicle tax rate. However, imported assembly vehicles that have been enjoying preferential tariff treatment in the name of component imports will not be allowed to evade taxation in the name of spare parts.
Mandelson claimed that the "Measures" has caused "many restrictions" on European automakers that have established joint ventures in China, and that these manufacturers cannot obtain additional income by exporting auto parts to joint ventures established in China. Do not buy auto parts from Chinese factories. His spokesman later claimed that the Chinese auto parts import mechanism is suspected of violating WTO rules, and the EU may file a lawsuit against the WTO.
This position of Mandelson is behind the European Automobile Industry Association which represents 13 European automobile companies. Ivan Hordach, as Secretary General, introduced the position of the European Automobile Industry Association.
Controversy
Ivan Hordach first stated in a high-profile statement that the attitude of European automakers is exactly the same as that of the Chinese government on the issue of increasing the localization rate of parts, but it takes time to achieve this goal.
"I believe that all foreign car manufacturers, including European car manufacturers, who invest in China, like the Chinese government, hope to increase the degree of localization of cars produced in China, because it will reduce manufacturing costs. However, each model will enter. In China's new models, the localization of parts and components will take 2 to 3 years, because the increase in production capacity will take time, and only the production capacity will increase, and the supply of supporting parts and components will enter China.†Ivan Hordach Say.
Ivan Hordach told reporters that another problem encountered by European automakers in implementation is that the relevant procedures are too complicated and increase the uncertainty of the import price of parts and components.
After the "Measures" are implemented, European automakers importing a component in China may pay tax at different tax rates: If this component is used on a vehicle with a high localization rate, it will only pay about 10% according to the standard of the component. Tariffs; if installed on models with low localization rates, they may have to pay a 30% tariff.
In addition, because of the customs clearance of imported parts, the auto company can not determine what type of vehicle it will use in the end, can only pay the deposit in accordance with the provisions. After the automobile production and assembly are completed, the automobile company first conducts a “self-audit†on the degree of localization of the car as a whole, reports the results to the national professional verification center of the vehicle characteristics, and finally determines the specific tax rate of the parts at the customs.
Ivan Hordach said: "The process of declaration and customs clearance is very complicated and the delay is very long. Companies need to spend a lot of energy to carry out audits and settlements, and the burden is heavy. At the same time, there is also a great deal of uncertainty in the import price of spare parts. Sex."
Solution?
"At present, the two parties are still in the negotiation process and hope that they can be settled through diplomatic means as soon as possible. Selecting WTO arbitration will only be the final solution," Ivan Hordach told the China Business News.
The solution he proposed is: I hope that the "Measures" can consider differentiating the localization of different models, such as the "tolerance time" for new cars for 2 to 3 years.
In fact, some European models that cannot meet the standards of localization are facing huge challenges, such as the Beijing Mercedes-Benz, which will be offline in December. In Japan and South Korea, due to the tighter control of the production of core components by OEMs, core projects such as engines have been set up in China, but the impact is not so obvious.
Automobile industry analyst Zhong Shi told reporters that the formulation of the "Measures" is based on "origin rules." By convention, it is usually judged by the rate of appreciation whether the product is made domestically. China's standard is a percentage of value-added of no less than 40%. In other words, when a certain product is imported into China, more than 40% of the added value is regarded as a Chinese product after being reprocessed, and preferential tariffs can be enjoyed; if the value does not reach 40%, even if it is produced in China, it is regarded as a foreign product.
"The purpose is to gradually reduce the reliance on imported parts by increasing the localization of core parts and components by direct promotion of joint ventures, so as to increase the autonomous production capacity of domestic parts and components." said Zhong Shi.
Therefore, Zhongshi believes that the Chinese side will not make concessions easily, or may make some simplifications on specific implementation clauses or make some adjustments based on the value-added amount; or if the European side requests, grant certain grace periods.
At the forum held on the same day, Zhang Xiaoyu, chairman of the China Automobile Engineering Association, stated: “The Chinese government’s development of such a “measure†is a protection for the transition period of China's auto parts industry. At the same time, it will not affect the foreign parts and components companies. China trades and invests, but if all the parts and components are imported, this part will have to be taxed according to the vehicle.I think we will handle this matter according to the basic rules of the WTO.(Huang Wei)
Source: First Financial Daily (Editor: Tong Zongli)