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

China Files Complaint Against US over Electric Vehicle Subsidies in WTO Dispute: Uncertain Outcome as Appellate Body is Dysfunctional

On Tuesday, the Chinese Commerce Ministry filed a complaint with the World Trade Organization against the United States. The complaint accused the US of having discriminatory requirements for electric vehicle subsidies. The ministry did not specify what prompted this move, but it is believed to be in response to a new US rule that went into effect on January 1st.

Under this rule, electric car buyers cannot receive tax credits of $3,750 to $7,500 if critical minerals or other battery components were manufactured by companies from China, Russia, North Korea, or Iran. According to the Chinese Ministry, these policies are discriminatory and distort fair competition. They also disrupt the global supply chain for new energy vehicles.

Member countries of the WTO can file complaints against each other’s trade practices and seek relief through a dispute settlement process. However, the impact of this case remains uncertain due to the WTO’s Appellate Body not functioning since 2019. If the U.S loses and appeals the ruling, progress may not be made in resolving this dispute.

China is a dominant player in the electric vehicle battery industry and has a growing auto industry that could challenge established carmakers globally. The European Union has also raised concerns about Chinese subsidies for electric vehicles. Due to the new U.S rule only 13 out of over 50 electric vehicle models sold in the US are eligible for tax credits leading automakers to scramble to source parts that meet these requirements

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