Daily Management Review

To Defend Its Electric Vehicle Industry, China Files A Challenge At The WTO Against US Subsidies


To protect its interests in the electric vehicle sector, China has started dispute settlement procedures against the United States at the World Trade Organisation, the Chinese mission announced on Tuesday and the WTO verified.

Under the U.S. Inflation Reduction Act (IRA), China said it was challenging "discriminatory subsidies" that led to the exclusion of goods from China and other WTO nations.

President Joe Biden wants to decarbonise the massive U.S. power industry, and this expansive law offers billions of dollars in tax credits to assist individuals in purchasing electric vehicles and businesses in producing renewable energy.

“Under the disguise of responding to climate change, reducing carbon emission and protecting environment, (these subsidies) are in fact contingent upon the purchase and use of goods from the United States, or imported from certain particular regions,” the Chinese mission said.

"To safeguard the legitimate interests of the Chinese electric vehicle industry and to maintain a fair level playing field of competition for the global market," the statement said, it was initiating the procedures.

China's request for WTO consultations "regarding parts of the Inflation Reduction Act of 2022 and its implementing measures" is being reviewed by Washington, according to U.S. Trade Representative Katherine Tai.

The IRA, according to a statement from Tai, is supporting the "clean energy future that we are collectively seeking with our allies and partners." She claimed that Chinese manufacturers were being benefited by what she called "unfair, non-market policies" in China.
WTO representative acknowledged receipt of China's request for dispute talks on the subject, but did not elaborate.

China has encouraged Washington to "promptly correct discriminatory industrial policies, and maintain the stability of the global industrial and supply chains for new energy vehicles," according to a spokesman for the Chinese Ministry of Commerce in Beijing.
After an adjudication panel is established, WTO decisions on trade disputes are meant to be issued within six months, although they frequently take longer.

If the WTO rules in favour of China, Washington may always challenge the ruling into a legal vacuum created by the United States' objection to judge nominations, which resulted in the closure of the WTO's top appeals court in December 2019.
Negotiations are underway, but there are a lot of barriers in the way of the United States' demands for revisions to the Appellate Body, which it claims has overreached itself.