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China to challenge Biden’s electric vehicle plans at the WTO

BEIJING — China filed a World Trade Organization complaint against the United States on Tuesday over what it says are discriminatory requirements for electric vehicle subsidies.

The Chinese Commerce Ministry did not say what prompted the move. But under a new U.S. rule that took effect Jan. 1, electric car buyers are not eligible for tax credits of $3,750 to $7,500 if critical minerals or other battery components were made by Chinese, Russian, North Korean or Iranian companies. The credits are part of President Joe Biden’s signature climate legislation, named the 2022 Inflation Reduction Act.

A ministry statement did not mention the specific restriction. It said, though, that under the act and its implementing rules, the U.S. had formulated discriminatory subsidy policies for new energy vehicles in the name of responding to climate change. It said the U.S. move excluded Chinese products, distorted fair competition and disrupted the global supply chain for new energy vehicles.

Member countries of the Geneva-based WTO can file complaints about the trade practices of other members and seek relief through a dispute settlement process.
The real-world impact of the case is uncertain. If the United States loses and appeals the ruling, China’s case most likely would go nowhere. That is because the WTO’s Appellate Body, its supreme court, hasn’t functioned since late 2019, when the U.S. blocked the appointment of new judges to the panel.

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