Date: March 27, 2024. — China has initiated a complaint with the World Trade Organization (WTO) against the United States, challenging the American subsidy policies for electric vehicles. The Chinese Commerce Ministry claims these policies are discriminatory because they exclude Chinese products, distort fair competition, and disrupt the global supply chain for new energy vehicles.
The dispute centers on the U.S. Inflation Reduction Act’s provisions, which, effective from January 1, 2024, stipulate that electric car buyers are ineligible for tax credits ranging from $3,750 to $7,500 if the critical minerals or battery components are sourced from Chinese, Russian, North Korean, or Iranian companies. This move appears to exclude Chinese products and could potentially distort the market by favoring certain regions over others.
China’s filing at the WTO is a significant step, as it could challenge the established global trade norms and the functioning of the WTO’s dispute settlement process. The real-world impact of this case is uncertain, especially since the WTO’s Appellate Body has been non-functional since late 2019 due to the U.S. blocking the appointment of new judges.
This development is part of a broader context where China’s rapidly expanding auto industry, particularly in electric vehicles and battery technology, poses a potential challenge to established carmakers worldwide. The European Union has also expressed concerns and launched its own investigation into Chinese subsidies for electric vehicles last year.
The case reflects the complexities of international trade and the tensions between the world’s largest economies, especially in the strategically important sector of electric vehicles, which are central to the global efforts to combat climate change.
