In a significant move to address trade tensions, China’s Ministry of Commerce announced on Monday that it has formally requested the World Trade Organization (WTO) to establish an expert panel concerning the dispute over subsidies for new energy vehicles (NEVs) under the United States’ Inflation Reduction Act (IRA).
The IRA, signed into law in August 2022, allocates a historic $369 billion towards climate and energy initiatives. According to a spokesperson from the ministry, the act sets the use of products from specific regions, notably the United States, as a prerequisite for subsidies. This, the spokesperson argued, excludes products from other WTO members, including China, thereby creating artificial trade barriers and escalating the costs associated with the global transition to green energy.
In March, China initiated WTO dispute consultations with the United States regarding certain tax credits under the IRA that promote the production of electric vehicles and renewable energy projects. However, these consultations failed to yield a resolution.
Highlighting China’s contributions to the global green energy transition, the spokesperson emphasized the nation’s commitment to advancing the proceedings. “China is determined to take concrete actions to uphold the authority and effectiveness of the multilateral trading system with the WTO at its core and to safeguard the joint efforts of the world to address climate change,” the spokesperson stated.
The spokesperson added that China respects WTO members’ implementation of industrial subsidies in line with WTO rules that support green energy transition and economic and social development. “We urge the U.S. side to abide by WTO rules and stop abusing its industrial policies to undermine international cooperation on climate change,” the spokesperson said.
Under WTO dispute settlement rules, if consultations fail to resolve a dispute within 60 days, the complaining party may request the establishment of a panel. This panel will review the facts and legal issues involved and make a ruling.
Experts view China’s request as a pivotal step in accelerating the litigation process. Ji Wenhua, a law professor at the University of International Business and Economics in Beijing, noted that the U.S. measures in question effectively constitute import substitution subsidies contingent upon the use of domestic over imported goods.
“The introduction and implementation of the IRA have severely disrupted the global NEV industry and supply chains, increased the cost of energy transition, and damaged the fair competitive environment,” Ji commented. “Furthermore, it has challenged the authority of the multilateral trading system.”
Ji added that China’s advancement of the litigation process not only demonstrates its firm stance in upholding the multilateral trading system but also provides an opportunity for other WTO members to express concerns over related issues and jointly defend international economic and trade rules.
Based on current information, Ji believes that even if the U.S. attempts to justify its actions as measures to address climate change, it is unlikely to comply with WTO exception rules and cannot alter the nature of its violation of WTO regulations.
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China requests WTO expert panel on U.S. EV subsidies dispute
cgtn.com
