CHINA DEFENDS FREE MARKET

China to challenge Biden's electric vehicle plans at the WTO

Associated Press Finance
Updated Tue, March 26, 2024

FILE - A view of the Ultium Cell factory in Warren, Ohio, July 7, 2023. China says it has filed a complaint at the World Trade Organization over US subsidies for electric vehicles. (AP Photo/Gene J. Puskar, File)


BEIJING (AP) — China filed a World Trade Organization complaint against the U.S. on Tuesday over what it says are discriminatory requirements for electric vehicle subsidies.

The Chinese Commerce Ministry didn't say what prompted the move. But under a new U.S. rule that took effect Jan. 1, electric car buyers are not eligible for tax credits of $3,750 to $7,500 if critical minerals or other battery components were made by Chinese, Russian, North Korean or Iranian companies. The credits are part of U.S. President Joe Biden’s signature climate legislation, named the 2022 Inflation Reduction Act.

A ministry statement didn't mention the specific restriction. It said, though, that under the act and its implementing rules, the U.S. had formulated discriminatory subsidy policies for new energy vehicles in the name of responding to climate change. It said the U.S. move excluded Chinese products, distorted fair competition and disrupted the global supply chain for new energy vehicles.

Member countries of the Geneva-based WTO can file complaints about the trade practices of other members and seek relief through a dispute settlement process.

The real-world impact of the case is uncertain. If the United States loses and appeals the ruling, China’s case likely would go nowhere. That is because the WTO’s Appellate Body, its supreme court, hasn’t functioned since late 2019, when the U.S. blocked the appointment of new judges to the panel.

China is the dominant player in batteries for electric vehicles and has a rapidly expanding auto industry that could challenge the world's established carmakers as it goes global. Its strength is in electric vehicles and its companies have become leaders in battery technology.

The European Union, concerned about the potential threat to its auto industry, launched its own investigation into Chinese subsides for electric vehicles last year.

Under the new U.S. rule, only 13 of the more than 50 EVs on sale in the U.S. were eligible for tax credits, down from about two dozen models in 2023. Automakers have been scrambling to source parts that would make their models eligible for the credits.

China opens WTO dispute against US subsidies to protect its EV industry

Reuters
Updated Tue, March 26, 2024 

FA logo is pictured outside the World Trade Organisation (WTO) in Geneva

GENEVA (Reuters) -China has initiated dispute settlement proceedings against the United States at the World Trade Organization to safeguard its interests in the electric vehicle industry, the Chinese mission said on Tuesday and the WTO confirmed.

China said it was contesting "discriminatory subsidies" under the U.S. Inflation Reduction Act (IRA) that it said resulted in the exclusion of goods from China and other WTO countries.

The wide-ranging law provides billions of dollars in tax credits to help consumers buy electric vehicles and companies produce renewable energy, as President Joe Biden aims to decarbonise the mighty U.S. power sector.

"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.

It said it was launching the proceedings "to safeguard the legitimate interests of Chinese electric vehicle industry and to maintain a fair level playing field of competition for the global market".

U.S. Trade Representative Katherine Tai said Washington was reviewing China's request for WTO consultations "regarding parts of the Inflation Reduction Act of 2022 and its implementing measures."

In a statement, Tai said the IRA was helping to contribute to a "clean energy future that we are collectively seeking with our allies and partners." She accused China of using what she described as "unfair, non-market policies" to the advantage of Chinese manufacturers.

A WTO official confirmed that a request from China for dispute consultations on the matter had been received, without providing details.

In Beijing, a spokesperson for China's Ministry of Commerce said it urged Washington to "promptly correct discriminatory industrial policies, and maintain the stability of the global industrial and supply chains for new energy vehicles".

WTO rulings on trade disputes are supposed to take six months after an adjudication panel is set up but often take longer.

If the WTO finds in favour of China, Washington could always appeal that decision into a legal void in place since December 2019 when the WTO's top appeals bench ceased to function due to U.S. opposition to judge appointments.


The United States is calling for reforms to the Appellate Body which it accuses of over-reach and negotiations are under way but face many obstacles.

(Reporting by Emma Farge, Gabrielle Tétrault-Farber in Geneva, Bernard Orr in Beijing and Jasper Ward in Washington; Editing by Alison Williams, William Maclean)