China Challenges US Electric Vehicle Subsidies at WTO, Highlights Dispute Settlement Process Flaws

China to oppose Biden’s electric vehicle initiatives at the WTO

The Chinese Commerce Ministry has filed a complaint with the World Trade Organization against the United States over what it perceives as discriminatory requirements for electric vehicle subsidies. These tax credits are part of President Joe Biden’s 2022 Inflation Reduction Act, aimed at addressing climate change. The Ministry believes that these policies exclude Chinese products, distort fair competition, and disrupt the global supply chain for new energy vehicles.

The real-world impact of the case is uncertain, given that if the United States were to lose and appeal the ruling, China’s case would likely not progress due to the WTO’s Appellate Body not functioning since late 2019. This highlights a larger issue with the organization’s dispute settlement process, which has been hampered by political tensions between member countries.

China is a dominant player in the battery market for electric vehicles and has a rapidly expanding auto industry that could challenge established carmakers globally. The European Union has also expressed concerns about Chinese subsidies for electric vehicles under the new U.S. rule, prompting automakers to source eligible parts to qualify for tax credits. It remains to be seen how this will impact China’s position in the global market and whether other countries will follow suit with similar policies.

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