In what could prove to be a major turning point in the fight against unfair protection policies in Asia, the U.S. has won a preliminary ruling in a World Trade Organization (WTO) case over Chinese tax policies that restrict imports of foreign auto parts into the world’s most populace country. The U.S., together with Europe and Canada, first filed the case back in 2006 in protest against China's tax treatment of foreign auto parts imports, which ended up discouraging Chinese carmakers from using them.

Speaking with Reuters, a U.S. trade official revealed that a WTO panel has agreed China acted inconsistently with its trade commitments. China's WTO commitments require it to set a much lower tariff on imported auto parts than it does on finished vehicles but it was in fact charging the same tariffs, the official explained.

The final report in the case is expected to be made public by the second or third quarter of this year, and marks China's first loss at the WTO. Once the report is issued, China would have the opportunity to appeal the decision. If the appeal is overturned, the U.S., EU and Canada could be given the right to impose sanctions on China but no decision has been made yet.