The European Union (EU) on Thursday required WTO bilateral consultations on China 's auto parts tariff rules, which the EU claims are not compatible with China's WTO obligations.

Under the Chinese rules, the tariffs for "whole vehicles" should be applied to the import of spare parts making up 60 percent or more of the value of a final vehicle.

To avoid the "whole car" tariff rates, a car-maker has to source 40 percent or more of the spare parts by value in China, said the EU executive European Commission in a press release.

The commission argues that this may contravene China's WTO obligations not to impose obligatory "local content" rules.

However, China says that the measures are designed to avoid circumvention by some foreign car-makers, who imports whole cars as spare parts to avoid the higher tariff rates for whole cars.

Under the WTO (world trade organization) rules, the consultations are a procedural step that will allow all parties to clarify legal issues and seek a constructive solution to the issue.

If the issue cannot be resolved in consultations within 60 days then the parties have the option of requesting a WTO panel to hear and rule on the dispute.

EU Trade Commissioner Peter Mandelson said: "Consultations will allow us to clarify the legal issues and find a mutually satisfactory solution. It remains my strong preference and intention to seek an amicable solution to this issue."

The commission noted that it is committed to finding a constructive and amicable solution to this issue.

This is a routine problem in the EU's wide trade relationship with China. The EU has pursued similar local content cases with India, Canada and Indonesia, said the commission.

It is reported that the United States on Thursday also requested consultations with China on this issue.

The EU has about 20-25 percent of the car production market in China.

Source: Xinhua