China lodges complaint with WTO over U.S. Inflation Reduction Act
China has formally lodged a complaint with the World Trade Organization (WTO) regarding the U.S. Inflation Reduction Act, stating that the legislation is discriminatory and distorts fair competition. The complaint was announced by China’s Ministry of Commerce in a statement on its website on Tuesday.
The Ministry of Commerce highlighted specific measures within the U.S. Inflation Reduction Act, such as subsidies for new energy vehicles, that it believes are unfair and discriminatory. The statement from China argued that the rules in the Act unfairly favor products from specific regions like the United States, while excluding products from China and other WTO member countries.
One key provision of the Inflation Reduction Act that China takes issue with is the requirement that electric vehicles purchased by U.S. consumers must not contain battery components produced by entities deemed to be of concern. Failure to comply with this requirement would disqualify consumers from receiving the $7,500 Clean Energy Vehicle Tax Credit. This measure, set to take effect in 2024, is seen by industry insiders as a move to reduce China’s influence in the U.S. electric vehicle supply chain.
In response to the complaint, China’s Ministry of Commerce criticized the U.S. for implementing measures that violate WTO rules and disrupt global supply chains under the guise of climate change and environmental protection. The Ministry expressed strong opposition to these actions, while reaffirming China’s commitment to respecting the rights of WTO members to implement industrial subsidies within the established framework of rules.
The dispute between China and the U.S. adds to a broader trend of escalating trade tensions between the two countries. Last year, the EU also launched investigations into Chinese electric vehicle manufacturers, citing concerns about the impact of low-priced Chinese products on its internal industries.
Efforts to reform the WTO’s dispute settlement mechanism have gained momentum amidst a growing number of unresolved trade disputes. As China’s complaint against the U.S. moves forward within the WTO, the outcome could have significant implications for the future of trade relations between the world‘s two largest economies.