The Truth About Cars » WTO The Truth About Cars is dedicated to providing candid, unbiased automobile reviews and the latest in auto industry news. Wed, 16 Jul 2014 16:33:07 +0000 en-US hourly 1 The Truth About Cars is dedicated to providing candid, unbiased automobile reviews and the latest in auto industry news. The Truth About Cars no The Truth About Cars (The Truth About Cars) 2006-2009 The Truth About Cars The Truth About Cars is dedicated to providing candid, unbiased automobile reviews and the latest in auto industry news. The Truth About Cars » WTO EU Files WTO Complaint Against Russia Over Bogus Recycling Fee Tue, 09 Jul 2013 12:32:17 +0000 Putin - Picture courtesy

Less than a year after joining the WTO, Russia finds itself dragged in front of the same. The EU launched a formal trade dispute with Russia, claiming that its Eastern neighbor is “illegally protecting its carmakers with a recycling fee levied on imported cars,” as Reuters reports.

“The European Commission has pursued every diplomatic channel for almost one year now to find a solution with our Russian partners on this matter but to no avail. The fee is incompatible with the WTO’s most basic rule prohibiting discrimination against and among imports,” EU Trade Commissioner Karel De Gucht told the wire.

Car importers have to pay a “recycling fee” of around 5 percent of a car’s sticker price, local makers do not.

Russia was only admitted to the WTO after Moscow signed up to a series of tariff cuts, lowering import duties on cars from 30 percent to 25 percent.” Slapping on the bogus “recycling fee” is simp0le seen as the old tariff with a green sheen.

Under WTO rules, Russia has 60 days to satisfy EU concerns about the recycling levy, by changing or explaining its policy. After that the EU could ask the WTO to adjudicate, which could force Moscow to change the rules or face trade sanctions.

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Trade War Watch 21: America Drags China In Front Of WTO As Obama Campaigns In Ohio Thu, 05 Jul 2012 12:25:58 +0000

The United States will report China to the WTO tomorrow, Reuters says. The contention: China’s decision to impose extra duties on more than $3 billion worth of cars imported from the U.S. According to Reuters, “the complaint comes as President Barack Obama campaigns in Ohio, where auto plants have been affected by the duties.” The Prez goes on a “Betting on America” bus tour.

In April 2011, China enacted punitive tariffs against cars imported from America.
The tariffs were heavily skewed against GM and Chrysler. China’s argument was that both were the recipient of government subsidies. The U.S. had used the same argument for imposing tariffs against Chinese products.

Said a U.S. trade official in an email to Reuters:

“The duties disproportionately fall on General Motors and Chrysler products precisely because of the actions that President Obama took to support the U.S. auto industry during the financial crisis. The president’s re-election campaign has sought to tie his Republican opponent, Mitt Romney, to the outsourcing of American jobs to China, tapping into public worry over high U.S. unemployment that will be a key factor in the Nov. 6 ballot. “

The dog wagging is the latest chapter in the drawn out trade war. It was started by America in 2009 when the U.S. enacted punitive tariffs against low priced made-in-China tires. Production of low cost tires moved to Thailand, from where they were imported duty free until that loophole was closed.

PS: Today, WTO spokesman Keith Rockwell told Reuters: “We have now received formal notification from the U.S.,”

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Ford And GM To Senator Stabenow: “Please, Stay Out Of This.” Thu, 15 Sep 2011 13:45:33 +0000

It is a regular occurrence. Every few months, the Lansing Senator Debbie Stabenow rushes to the aid of GM and Ford and defends them against the nasty Chinese. The problem is: GM and Ford don’t want or need her help.

Yesterday, Stabenow fired another of her regular letters to U.S. Trade Representative Ron Kirk, and complained “about a recently reported Chinese trade practice that would be a clear violation of World Trade Organization (WTO) rules.” Says the letter (full text here):

“China’s actions are part of a disturbing trend where China demands American advanced-technology product secrets in order for those products to be sold in the world’s second largest market. In contrast, the United States—the world’s largest market—follows the rules and allows Chinese products to be sold freely. Many Americans rightly believe that China is playing us for fools:  China gets to access our large market, while our products face numerous restrictions and outright intellectual property theft.”

There are a few troubles with Stabenow’s complaint.

One, Debbie does not know what Debbie is talking about. She has her information from the New York Times, which “recently reported that China is attempting to pressure American automakers, including General Motors and Ford, to transfer core technologies of their electric and plug-in hybrid vehicles to Chinese companies, in order for those vehicles to qualify for China’s clean energy vehicle incentive program.“ Don’t Senators usually have better sources? The CIA? The U.S. Embassy in Beijing? China Daily? Wikileaks?

Two, no official policies have been announced in China. It looks like China will be happy if foreign joint ventures will build Chinese EVs under “Chinese” brands to keep up Chinese appearances. Nobody is talking about handing over technologies.  And even that is unclear until the law is finally announced.

Three, both GM and Ford, signal desperately: “Please, stop helping us!”

Writes the Detroit News:

“Both GM and Ford said they have no plans to build electric vehicles in China.

Ford spokeswoman Meghan Keck said the matter wasn’t an issue for the company.

“We appreciate Senator Stabenow’s continued support of our industry. However, the issues she raised apply to electric vehicles, which we do not currently sell or produce in China,” Keck said.

GM spokesman Greg Martin said the company has no plans to build the Chevrolet Volt in China. “

Should’t Ms. Stabenow at least ask Ford and GM whether they require assistance from their Senator?

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Editorial: Bailout Watch 374: Trade War Looms Large in Bailout Nation Thu, 05 Feb 2009 10:08:26 +0000 Ever since bailout measures for the auto industry were first mooted, free market detractors whispered: "WTO." Nobody took it seriously. True; according to the World Trader Organization's rules, direct subsidies are not allowed. But it's equally important to note that the 153-member quango has never put a single issue to a vote since its birth in 1995. Consensus governance means that as long as nobody complains, and especially, as long as everybody plays the same game, the WTO hangs fire on principle. Auto industry "loans"? They're all doing it. Still there is a line a WTO member mustn't cross. And America almost crossed it.]]> Ever since bailout measures for the auto industry were first mooted, free market detractors whispered “WTO.” Nobody took it seriously. True, according to the World Trade Organization’s rules, direct subsidies are not allowed. But it’s equally important to note that the 153-member quango has never put a single issue to a vote since its birth in 1995. Consensus governance means that as long as nobody complains, and especially, as long as everybody plays the same game, the WTO hangs fire on principle. Auto industry loans? They’re all doing it. Still, there is a line a WTO member mustn’t cross. And America almost crossed it.

Recent amendments to Uncle Sugar’s near-as-dammit trillion dollar economic stimulus package would require US firms to use local steel and other components in state-funded projects. The provision kicked sand in the face of the WTO’s raison d’être: the most favored nation (MFN) rule.

Under the terms of the MFN rule, a WTO member must apply the same conditions on all trade with other WTO members. The provision also applies to trade within and without a given nation. “Imported and locally-produced goods should be treated equally (at least after the foreign goods have entered the market).” To do otherwise constitutes blatant protectionism.

Similar buy local protectionist measures have been adopted or considered in Argentina, China, Indonesia, Ecuador, India, Russia (re: imported used cars) and Vietnam. All seven WTO member nations have landed on a WTO ­surveillance list.

The Guardian writes that the European Union (EU) is pissed with the “buy American” bailout provision. They’ve threatened legal action and retaliatory measures against the US if the Obama administration enshrines this clause in its multibillion-dollar economic stimulus package. Brussels said it could take the US to the World Trade Organization for breaching treaty rules.

The warning came just a day after Joaquín Almunia, EU economic and monetary affairs commissioner, pointed to “clearly protectionist measures” emanating from Washington. The EU ambassador to Washington has expressed similar concerns. A spokesman for Lady Ashton, EU trade commissioner, said: “If the provisions that are finally passed by the US Senate and approved by President Obama infringe the provisions of the GPA [general procurement agreement], to which the US is a signatory, then this is something we will have to consider taking them to the WTO over.”

Compared to previous hints and “concerns,” this amounts to a barrage of warning shots. Amid fears that the US and other countries could trigger a disastrous 1930s-style “Great Depression” trade war through protectionist blocks on trade, the European commission highlighted similar moves in Europe.

A French €10b aid program requires firms to source components solely from France, keep only the French plants open and scrap plans to “de-localize” jobs to elsewhere in the EU. Neelie Kroes, EU competition commissioner, will warn French ministers in talks in Brussels that state aid must not only comply with competition rules but also with EU laws on freedom of movement and capital. “They have to realize that once they start down that protectionist path it’s a descent into chaos,” her aides said.

On Tuesday, U.S. President Barack Obama signaled fear that Buy American provisions—supported by Democrats in steel-producing and economically distressed states—would trigger a trade war at a time when the global economy is in dire straits.

On Wednesday, lawmakers voted to soften the controversial “Buy American” provisions in the proposed U.S. economic stimulus package. The amendment, approved by the Senate, requires the Buy American provisions be “applied in a manner consistent with U.S. obligations under international agreements.” Which is like saying you can burgle a house as long as you don’t break the law.

The bottom line for carmakers: even if America’s avoided a trade war (for now), they can’t win.

If the feds restrict the bailout buffet to The Big 2.8 and domestic production, they run the risk of retaliatory measures from neighbors—and markets—around the globe.

And don’t forget it’s a small world after all. In the run-up to the meltdown, Motown’s automaker practically demanded that its suppliers outsource abroad. By now, keeping the suppliers’ share of the domestics’ business within U.S. borders will be more about spin than compliance. Especially if those suppliers receive their requested $20.5b bailout.

On the other hand, if the feds don’t limit their largess to domestic producers, they run the very real risk of alienating whatever voter and/or union support exists for the pork barrel parade. A billion dollars of TARP money for Brazil? Esqueça-se.

On a practical basis, a truly “fair” bailout would put the domestics at a disadvantage.

Think of it this way: the existing Chrysler loans are equivalent to a current subsidy of $10k per vehicle sold. If, instead, you offered American car buyers $10k off a car, they wouldn’t buy a Chrysler. Clearly, you couldn’t offer the discount certificate just to Chrysler buyers. What kind of country would that be? Welcome to Bailout Nation.

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