2024-03-27 12:45:00
China has lodged a complaint with the World Trade Organization (WTO) over the U.S. Inflation Reduction Act, saying it is discriminatory and distorts fair competition.
China’s Ministry of Commerce said in a statement on its website on Tuesday that China had resorted to the World Trade Organization’s dispute settlement mechanism over measures such as subsidies for new energy vehicles under the U.S. Inflation Reduction Act.
The above-mentioned statement stated that the relevant rules “are based on the use of products from specific regions such as the United States as a prerequisite for subsidies, and formulate discriminatory subsidy policies for new energy vehicles, etc., excluding products from China and other WTO members.”
According to the “Inflation Reduction Act” signed into law by U.S. President Joe Biden in August 2022, starting in 2024, if the electric vehicles purchased by U.S. consumers contain battery components produced by “foreign entities of concern”, they will Not eligible for the $7,500 Clean Energy Vehicle Tax Credit. This policy will be extended to minerals in battery components in 2025. Industry insiders see the move as a way to reduce China’s role in the U.S. electric vehicle industry supply chain.
This definition covers any company headquartered in China, including subsidiaries of U.S. companies, as well as companies elsewhere that are 25% or more owned by Chinese state-backed entities. These rules also apply to Iran, North Korea and Russia.
Other arrangements involving Chinese companies, such as technology licensing, may be allowed under relevant regulations. China-based Contemporary Amperex Technology, the world’s largest maker of electric vehicle batteries, has been licensing its technology to Ford Motor to help the U.S. automaker build a new facility in Michigan. The factory produces car batteries.
China’s Ministry of Commerce said in a statement that the United States has implemented measures that violate WTO rules and disrupt global supply chains in the name of “coping with climate change” and “low-carbon environmental protection.” “China is firmly opposed to it,” China’s Ministry of Commerce said, adding that China respects the rights of WTO members to implement industrial subsidies within the framework of rules.
Last month, Biden ordered the U.S. Commerce Department to investigate foreign-made automotive software, saying Chinese technology posed potential national security risks. The investigation might lead to U.S. restrictions on the use of certain parts in cars.
The Wall Street Journal reported in December that the Biden administration was considering raising import taxes on Chinese electric vehicles, which currently stand at 27.5%.
China will surpass Japan and Germany in 2023 to become the world’s largest automobile exporter, while Chinese electric vehicle manufacturer BYD will surpass Tesla in the fourth quarter of 2023 to become the world’s largest pure electric vehicle manufacturer.
In September last year, the EU launched a countervailing investigation once morest Chinese electric vehicle manufacturers, pointing out that China’s low-price products had an impact on the EU’s internal industries.
In December 2022, China filed a lawsuit with the WTO over the new U.S. semiconductor rules, calling it trade protectionism. In the same month, following China, Norway, Switzerland and Turkey filed lawsuits, the WTO determined that the United States violated international trade rules by imposing tariffs on imported steel and aluminum.
WTO members have been stepping up efforts to reform the organization’s dispute settlement mechanism. Most of the disputes have gone on for years without resolution.
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