Global Dispute Over Electric Vehicle Subsidies: United States vs. China.

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

The United States has been hit with a complaint from China over perceived discriminatory requirements for electric vehicle subsidies. This comes after President Joe Biden’s 2022 Inflation Reduction Act, which states that electric car buyers are not eligible for tax credits if critical minerals or other battery components were made by Chinese, Russian, North Korean, or Iranian companies. The Chinese Commerce Ministry has expressed concerns that these policies exclude Chinese products and distort fair competition in the global supply chain for new energy vehicles.

China is a dominant player in the battery market for electric vehicles and has a rapidly expanding auto industry that could challenge established carmakers globally. The European Union has also expressed concerns about Chinese subsidies for electric vehicles. Under the new U.S. rule, only 13 out of over 50 EV models on sale in the U.S. were eligible for tax credits, prompting automakers to source eligible parts to qualify for the credits.

The impact of this case is uncertain as if the United States were to lose and appeal the ruling, China’s case would likely not progress due to the WTO’s Appellate Body not functioning since late 2019. Member countries of the WTO can file complaints about the trade practices of other members and seek relief through a dispute settlement process.

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