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Vol. 7 #4, March 2008

China Loses First WTO Case
The World Trade Organization ruled against China for the first time on February 14. The precedent-setting case was brought by the United States, Canada, and the European Union over unfair barriers to imports of foreign car parts. It is expected to spur further challenges and increased efforts to force China to open its markets. It was argued that Chinese tariffs were discouraging auto makers from using imported car parts for the vehicles they assemble in China. As a result, car parts companies had an incentive to shift production to China, eliminating production in the United States, Canada, and Europe. China can still appeal the ruling. The Chinese government has argued that the tariffs are intended to prevent nearly finished autos from being imported with minimal assembly being done in China in order to circumvent higher tariff rates for finished cars.