Shanghai's Customs Office has agreed to reimburse Northwest Airlines of the United States for improperly assessed taxes in a case that could set a precedent for other foreign airlines. 'Customs wrongly levied taxes on Northwest Airlines on a wide range of goods that should have been exempt under a China-US aviation treaty,' said Dong Cheng, of Shanghai customs' tariff division. The Shanghai Daily quoted US consular official Christine Ho as saying she was surprised by how quickly the Shanghai Customs Office had cleared up the matter, especially because tax assessors in Beijing had dragged their feet in a similar case. The newspaper quoted the director of the tariff division, Shao Xiaoping, as saying 'the case set a precedent for customs'. 'If other foreign airlines have encountered the same problem, they can contact us and we will deal with it.' According to the newspaper report, city officials illegally collected six million yuan (about HK$5.62 million) in taxes from Northwest Airlines during the past decade. It said the US carrier had agreed to a reimbursement of just 200,000 yuan as a sign of good faith. 'Our office made a mistake, and we tried to do our best to make up for it,' Mr Dong said. 'This mistake could have affected friendly ties between the US and China, and could have created barriers to normal trade.' Ms Ho said resolution of the tax matter reflected the local government's willingness to apply appropriate international laws in a co-operative and transparent manner in line with World Trade Organisation requirements.