The World Trade Organisation (WTO) has decided to investigate complaints from the US, Canada and Europe that import duties on automotive components are unfair.

China applies a 10% tariff on imported vehicle components, but this rises to 25% if they are considered to account for 60% or more of a whole vehicle. This is the same duty rate applied to a completely built-up vehicle.

The WTO will set up a panel of three members, which will have six months to reports its findings. Either side can then appeal, which means that a final ruling might not be made until 2008. An earlier request for an expert panel was made last month, but was blocked by China. Such a request can only be blocked once.

An official from China's Ministry of Commerce has been quoted as saying that the rules are in keeping with commitments China made on joining the WTO.

Australia, Japan, Mexico and Argentina all signed up as interested third parties in the auto parts panel, and other countries have 10 days to register.

This is the first time China has faced investigation by the WTO since it joined in 2001.