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

On Tuesday, China filed a complaint with the World Trade Organization against the U.S., accusing the country of having discriminatory requirements for electric vehicle subsidies. The Chinese Commerce Ministry did not specify what prompted this move, but it is believed to be in response to a new U.S. rule that came into effect on January 1st. This rule states that 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, the U.S. has formulated discriminatory subsidy policies for new energy vehicles under the 2022 Inflation Reduction Act, which is part of President Joe Biden’s climate legislation. These policies exclude Chinese products and distort fair competition in the global market for electric vehicles. The European Union has also raised concerns about Chinese subsidies for electric vehicles. Due to these new regulations, only 13 out of over 50 electric vehicle models sold in the U.S are eligible for tax credits, forcing automakers to scramble to source parts that meet the requirements for the credits.

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 as if the US loses and appeals the ruling; it may not progress due to WTO’s Appellate Body not functioning since 2019. It is worth noting that China is a dominant player in the electric vehicle battery industry and has a growing auto industry that could challenge established carmakers globally

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