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Beijing Suffers Its First WTO Defeat


China has suffered its first defeat at the World Trade Organization, and Australia's low unemployment level means interest rates may be raised again. Claudia Blume has more on these and other regional business stories from VOA's Asia News Center in Hong Kong.

The World Trade Organization has upheld a complaint by the United States, Canada and the European Union over China's import tariffs on car parts. A WTO panel ruled that Beijing improperly taxes imported auto parts at the same rate as complete cars made outside China.

The complaining countries argued that the taxation scheme forces foreign auto part manufacturers to move production to China, costing jobs abroad. The ruling was China's first defeat at the WTO since it joined the organization in 2001.

Australia's unemployment rate dropped to a 33-year low of 4.1 percent in January. While this is good news, the central bank is warning that a tight labor market could lead to wage increases and push up inflation.

Australian Treasurer Wayne Swan promises to address a skills shortage in the country.

"At the core of the program we took to the Australian people are schemes to address the skills shortage and a whole series of plans to deal with infrastructure bottlenecks," said Swan. "So this government will expand the skills base in the economy."

Australia's central bank already raised its key interest rate by 25 basis points, to seven percent, at the beginning of February, as part of the effort to curb inflation. After the announcement of January's unemployment figures, economists say another rate increase is likely.

In other news from Australia, the country reached a so-called 'open skies' agreement with the United States. American and Australian Airlines will now be allowed to operate unlimited flights between the two countries, clearing the way for increased competition on one of the world's most lucrative and protected long-haul routes.

The route has been dominated by Australian carrier Qantas and America's United Airlines. The deal opens the way for plans by Australia's Virgin Blue to fly to the United States later this year, and other U.S. airlines are expected to ask for routes.

The Australian government said, however, that it will not reconsider its decision to deny Singapore Airlines the right to fly between Australia and the U.S.

U.S. investment bank Morgan Stanley received clearance from the Vietnamese government to establish a joint venture with local brokerage Gateway Securities. Morgan Stanley will own 49 percent of the securities venture, which will be based in the Vietnamese capital, Hanoi. It is the first time a Western bank will become directly involved in the communist country's securities industry.

The deal comes several months after Morgan Stanley's plan to set up a securities company with a Vietnamese state agency collapsed.