China says the latest World Trade Organization ruling that would diminish tarrifs on China's auto parts imports will have minimal impact on the country's auto industry. Under the new WTO ruling, China now has to place the same tarrifs on all of its imported auto parts. CRI's Zheng Chenguang reports.

Reporter:
China used to consider auto parts as a complete vehicle if they accounted for more than 60 percent of the value of a final vehicle, and charged a 15 percent higher tariff on them.

It says the rule aimed to prevent tax evasion by companies that import whole cars as spare parts to avoid higher tariff rates.

The US, EU and Canada filed the case to the WTO in March 2006, complaining that China's taxes on imports of foreign auto parts discouraged Chinese carmakers from using them.

In its latest verdict, the WTO has urged China to remedy its policy or face punitive trade sanctions.

Shi Jianhua is vice secretary general of the China Automotive Trade Association.

"The ruling has some impact on the development of our auto industry, but not to a large measure. A majority of enterprises have introduced advanced technologies and have chalked up a localization rate of over 40%."

At the same time, Shi Jianhua also points out that the priority for China's auto parts providers is to reinforce their own competitiveness.

"For any Auto parts manufacturer, if they want to survive, develop and retain a position in the market, they have to improve their technological level, grasp core technologies and step up research and production capacity on key technologies. "

China now has a reasonable period of time to bring its measures into compliance with WTO rules. This period of time will be negotiated and determined by arbitration.

Zheng Chenguang, CRI news.