Universal Cargo Management

China Announces Plans to Cut Import Taxes on Certain Autos and Auto Parts

According to Xinhua news agency, China’s Ministry of Finance recently announced that it will cut import taxes on certain cars and auto parts as of July 1 to comply with commitments made as part of its WTO accession agreement. The Chinese government plans to cut tariffs on passenger cars, SUVs and minivans from 28% to 25%. The government will also cut tariffs on certain auto parts, such as auto bodies and medium- and low-emission engines, will be reduced to 10% from between 13.8% to 16.4%.

It is still unclear whether this latest move will have any effect on a U.S. request for consultations with China over tariffs on its auto parts. The USTR announced March 30 that the U.S., the European Union and Canada requested WTO dispute settlement consultations with China over its treatment of imported auto parts. According to the USTR, China’s taxes on imported auto parts discourage automobile manufacturers in China from using imported auto parts in the assembly of vehicles. China’s WTO commitments limit its tariffs on imported auto parts to rates that are significantly below China’s tariffs on finished vehicles.

PTO Program in China on Protecting GIs and Trademarks

The U.S. Patent and Trademark Office and the China Trademark Office recently completed a weeklong program in China on the protection of geographical indications. GIs identify a good as originating in the territory of a WTO member, or a region or locality in that territory, where a given quality, reputation or other characteristic of the good is essentially attributable to its geographic origin. Examples of GIs from the U.S. include Florida oranges, Idaho potatoes and Vidalia onions.

Similar to the U.S., China protects GIs through a trademark system, which is administered by the CTMO. However, China also has a second system for protecting GIs, administered through a separate government agency, which has led to confusion over the protection of GIs and trademarks. “The USPTO-CTMO geographical indications program represents a significant effort on behalf of each office to understand our respective systems for the protection of trademarks and geographical indications,” noted PTO Director Jon Dudas. “Better mutual understanding will lead to certainty and confidence in the protection afforded to trademarks and geographical indications.”

BIS Official Outlines New China Export Control Policy

In recent remarks to the Center for Strategic and International Studies, Under Secretary of Commerce for Industry and Security David McCormick gave an overview of an upcoming regulation on exports of dual-use items to China. McCormick said the rule, which he said is not properly characterized as a “catch-all,” is aimed at increasing civilian high-tech trade with China while ensuring that such exports do not benefit the Chinese military.

McCormick said the proposed changes aim to free trade in certain dual use items with certified importers in China for civilian purposes. Specifically, U.S. exporters seeking to increase their market share in sectors such as semiconductor equipment and electronics will not have to apply for licenses for sales to these certified companies. To become certified, Chinese companies will have to demonstrate an established record of nonproliferation and responsible civilian use of U.S. imports. McCormick said this certification process will require “unprecedented openness and cooperation on the part of Chinese companies … [and] create incentives for them to demonstrate good faith and sound practices.”

In addition, McCormick said, the new rule will prevent exports of 47 categories of high-tech products for incorporation into Chinese weapons systems. “It is not a wide-ranging ‘catch-all regulation’ that subjects everything from fountain pens to office furniture to government scrutiny,” he stressed. “Rather, these changes carefully target certain technologies that, while unrestricted until now, have the potential to materially enhance China’s military capabilities. The Administration will also urge others, particularly in Europe and Japan, to take similar steps. And we will continue to conduct on-the-ground spot checks in China to reduce the risk that civilian exports are diverted to third parties or to China’s own military purposes.”