(Geneva) The WTO will rule on a trade dispute between China and the United States over US subsidies granted by the Biden administration’s green plan to the electric vehicle sector, a source familiar with the matter said on Monday.
The decision was made at a meeting of the World Trade Organization’s (WTO) Dispute Settlement Body (DSB), the source said, adding that “China has argued that the United States is using climate change as a pretext for protectionism.”
China believes that these subsidies granted by President Joe Biden’s green plan (Inflation Reduction Act) to the American electric vehicle sector create unfair competition.
The world’s second-largest economy had opened the dispute with the WTO in March, but following the failure of negotiations with Washington, it asked the organisation to create a group of experts to settle the dispute.
China had already filed a request for a ruling with the WTO in July, which the United States opposed. But according to procedural rules, it is not possible for a country to block a request twice in a row.
The United States announced in 2022 a massive aid program to support companies in the energy transition sector and electric cars manufactured on American soil.
Under the leadership of Joe Biden, Washington was then trying to react to Beijing’s subsidies to its industry and to launch its own green strategy.
The US law “establishes as a precondition for obtaining subsidies that products come from specific regions, such as the United States” and “excludes products from China,” the Chinese Ministry of Commerce said in July.
The WTO dispute comes as Beijing and Washington are already at loggerheads over a range of trade issues, including tariffs, cutting-edge technology and the social network TikTok.
Determined to slow Chinese progress in the sector, the United States had already announced in May the quadrupling of customs duties on imported Chinese electric vehicles, economic competition with China being at the heart of the American presidential campaign.