China Files WTO Complaint Against US over Discriminatory Electric Car Tax Credit Rule

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

The United States has recently implemented a new rule that excludes electric car buyers from tax credits if critical minerals or battery components were made by Chinese, Russian, North Korean, or Iranian companies. This rule is part of President Joe Biden’s 2022 Inflation Reduction Act aimed at addressing climate change. In response to this policy, China has filed a complaint with the World Trade Organization (WTO) against the United States, alleging that it perceives the requirements as discriminatory.

The Chinese Commerce Ministry did not specify what prompted the complaint but expressed concerns that the U.S. has implemented discriminatory subsidy policies for new energy vehicles under the act. The Ministry believes that these policies exclude Chinese products, distort fair competition, and disrupt the global supply chain for new energy vehicles. Member countries of the WTO can file complaints about trade practices of other members and seek relief through a dispute settlement process.

If China were to lose and appeal the ruling, it is uncertain what the real-world impact would be given that if the Appellate Body of WTO does not function since late 2019. China is a dominant player in the battery market for electric vehicles and has an expanding auto industry that could challenge established carmakers globally. The European Union has also expressed concerns about Chinese subsidies for electric vehicles under this new U.S rule only 13 out of over 50 EV models on sale in the U.S are eligible for tax credits which prompted automakers to source eligible parts to qualify for these credits.

The case highlights ongoing tensions between China and the United States over trade practices and subsidies for electric vehicles, which could have significant implications for both countries’ industries and global markets.

Leave a Reply