China has taken a significant step in its battle against what it perceives as unfair trade practices by the United States. The Chinese Commerce Ministry announced on Monday its request for the World Trade Organization (WTO) to establish an expert panel to examine the dispute surrounding new energy vehicle (NEV) subsidies under the U.S. Inflation Reduction Act (IRA).
The IRA, signed in mid-August 2022, earmarks a record $369 billion for climate and energy initiatives. However, China criticizes the act for conditioning subsidies on the use of products from specific regions like the United States, thereby excluding WTO members, including China. This, China argues, artificially creates trade barriers, inflates the costs associated with the global green energy transition, and disrupts fair competition.
In March, China initiated WTO dispute consultations with the U.S. over certain tax credits in the IRA that incentivize electric vehicle production and renewable energy projects. With negotiations stalling, China is now pushing forward to formalize the dispute resolution process.
A ministry spokesperson emphasized China's commitment to the multilateral trading system and its determination to safeguard global efforts in addressing climate change. \"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 stated.
Legal experts view China's request for a WTO panel as a pivotal move. Ji Wenhua, a law professor at the University of International Business and Economics in Beijing, described the U.S. measures as import substitution subsidies favoring domestic over imported goods. Ji pointed out that the IRA has disrupted global NEV supply chains, increased energy transition costs, and compromised a fair competitive environment. He further noted that the IRA challenges the authority of the multilateral trading system.
As the WTO proceeds to establish the expert panel, it will review the facts and legal issues of the case before making a ruling. According to Ji, even if the U.S. defends its actions as climate measures, they are unlikely to align with WTO exception rules, thereby solidifying their position against the U.S. in this dispute.
China's actions not only reflect its steadfast stance on upholding international trade rules but also signal to other WTO members the importance of addressing similar concerns collectively.
Reference(s):
China requests WTO expert panel on U.S. EV subsidies dispute
cgtn.com
