U.S. Challenges China At WTO Over 'Discriminatory' Taxation Of Imported Aircraft

December 09, 2015


The Office of the U.S. Trade Representative on Tuesday (Dec. 8) requested consultations with China at the World Trade Organization over allegedly discriminatory value-added tax (VAT) measures affecting regional jets and other smaller aircraft that have been in effect in various iterations since 2000.

Inside U.S. Trade | December 8, 2015

The measures at issue subject imported foreign aircraft weighing 25 metric tons or less to a 17 percent VAT but exempt Chinese-made aircraft in that class from the tax, according to U.S. trade officials. The U.S. over the past three years has exported roughly half a billion dollars worth of trade in these smaller aircraft, one official said.

The measures do not affect the large civil aircraft sold by Boeing, and also do not directly apply to aerospace parts manufacturers. But officials drove home the argument that parts makers would be indirectly affected by lost sales of aircraft to China, which is trying to promote its own "national champion," the Commercial Aircraft Corporation of China or COMAC.

The consultation request, submitted to China on Tuesday morning in Geneva, charges that the measures violate several articles of the General Agreement on Tariffs and Trade (GATT) that prohibit discriminatory taxation policies and require WTO members to accord imported products treatment no less favorable than that accorded to domestic products. Specifically, it references GATT Articles III:2 and III:4. 

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