U.S. Snaps Back At China’s WTO Complaint Over EV Tax Breaks

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The United States Trade Ambassador, Katherine Tai, responded to China’s WTO consultation request with harsh criticism. She says that not only is the country using unfair practices to undermine fair competition but it also leverages non-market practices and policies. The request to the WTO is still in limbo but could lead to changes in the act or other countermeasures.

China argues that the Inflation Reduction Act (IRA) unfairly tilts the playing field and discriminates when it comes to electric vehicles. This complaint arises after the US restricted the number of electric cars that qualify for a clean vehicle tax credit up to $7,500 if their critical minerals or battery components were sourced from “foreign entities of concern,” including companies from China, Russia, North Korea and Iran.

That’s why it’s levied a consultation request with the WTO. Ambassador Tai’s remarks come as a direct denunciation of that consultation request.

“The Inflation Reduction Act is a groundbreaking tool for the United States to seriously address the global climate crisis and invest in U.S. economic competitiveness. It is our contribution to a clean energy future that we are collectively seeking with our allies and partners,” Tai said. No doubt, to a degree, the act has forced some companies to change plans so that their products can take full advantage of the tax credits offered.

MORE: China Challenges America’s EV Tax Breaks In WTO Complaint

Tai then took to calling out China’s behavior in her view. “Meanwhile, the PRC continues to use unfair, non-market policies and practices to undermine fair competition and pursue the dominance of the PRC’s manufacturers both in the PRC and in global markets… The United States will also continue to work with allies and partners to address the PRC’s unfair, non-market policies and practices,” she concluded.

All of this hullabaloo could amount to very little aside from political wrangling. As Carscoops noted just yesterday, this dispute could take quite a while to conclude. If the WTO were to find in favor of China, it’s likely that the U.S. would appeal that decision. Of course, appealing would take extra time since the appeals board has been defunct since 2019 when the U.S. opposed its judge appointments.

Notably, China isn’t the only foreign nation with negative feelings about the IRA. As the South China Morning Post points out, Japan, South Korea, and the European Union have all voiced concern over the act.

The full statement is below.

The Inflation Reduction Act is a groundbreaking tool for the United States to seriously address the global climate crisis and invest in U.S. economic competitiveness. It is our contribution to a clean energy future that we are collectively seeking with our allies and partners. Meanwhile, the PRC continues to use unfair, non-market policies and practices to undermine fair competition and pursue the dominance of the PRC’s manufacturers both in the PRC and in global markets.

Under President Biden’s leadership, we are tackling the climate crisis while strengthening America’s supply chains and energy security. We are building a clean energy economy, powered by American innovators, workers, and manufacturers that will create good-paying union jobs and cut the pollution that drives climate change and environmental injustice.

Through this bold action, the United States will continue to pursue major new investments in clean energy technology, from solar and wind to batteries and electric vehicles and beyond. The United States will also continue to work with allies and partners to address the PRC’s unfair, non-market policies and practices.

We are carefully reviewing the consultation request.

Lead image GM