China challenges United States’ EV subsidies at WTO – Asia Times

China challenges United States’ EV subsidies at WTO - Asia Times

China has complained to the World Trade Organization ( WTO ) after the US exempted buyers who bought electric vehicles ( EVs ) using Chinese batteries from its subsidy program. &nbsp, &nbsp, &nbsp,

Since January 1, EV buyers in the US have never been eligible for tax credits of US$ 3, 750 to US$ 7, 500 if essential minerals or other device components are manufactured from Chinese, Russian, North Korea or Persian companies, according to US President Joe Biden’s personal environment legislation, named the 2022 Inflation Reduction Act. &nbsp,

As Russia, North Korea and Iran do not bulk develop EV batteries, the United States ‘ new rules obviously targeted Chinese companies only. &nbsp,

According to an unknown representative for the Foreign Commerce Ministry, the US “formulated unfair payment plans for new energy cars and excluded products made by other WTO members like China from its payment scheme” according to a statement released on Tuesday.

According to the spokesperson,” Such a move has seriously distorted fair competition, seriously disrupted the global supply chain of new energy vehicles and violated WTO’s national treatment and most favored nation treatment principles.” China is” strongly opposed to it.”

The spokesperson urged the US to abide by WTO regulations, respect the global EV sector’s development trend, and promptly correct discriminatory practices.

China’s WTO complaint was filed after the Chinese Foreign Ministry criticized western nations on March 22 for supporting protectionism and imposing trade restrictions in the name of” fair competition” and “national security.”

” What they protect are their underdeveloped industries, what they lose is their future development and what they reap is lose- lose”, Lin Jian, a spokesperson of China’s Ministry of Foreign Affairs, said in a regular media briefing last week. The long-term effects of the changes to their industries and customers will be undermined, as will the global transition to a green economy and the fight against climate change.

” The popularity of Chinese EVs relies on our technological innovation and superb quality in the midst of global competition, rather than subsidies”, Lin said. &nbsp,

He added that China has removed all restrictions on foreign investment in manufacturing and is still open to international car manufacturers, who can fully participate in the profits of China’s large market. He claimed that Tesla sold over 600,000 cars in China last year, while Mercedes-Benz, BMW, and Volkswagen remain household names.

Anti- subsidy probe

The European Union announced in September that a 13-month investigation would look into whether government subsidies have helped Chinese electric car manufacturers gain market share in recent years. &nbsp,

A KPMG report said that in 2022 the top three European destinations for China’s EVs were Belgium ( 198, 000 units ), the United Kingdom ( 109, 000 units ) and Slovenia ( 47, 000 units ). &nbsp,

Some Chinese experts predicted that after the investigation, the EU will likely impose additional tariffs on imported Chinese EVs. They claimed that Chinese producers of electric vehicles and batteries can try to sell components, set up factories overseas, and collaborate with foreign companies to avoid extra tariffs. &nbsp,

Currently, tariffs on Chinese EVs are set at 10 % in Europe and a whopping 27.5 % in the US. A 2.5 % usual tariff applies to imported goods, and an additional 25 % tariff was imposed during the Trump era. &nbsp, &nbsp,

A Chinese writer using the pen name” Xiao Ding” claims in an article published in January that” the additional 25 % tariff policy has seriously disrupted Chinese EV makers ‘ development plan in the US.” The additional tariff” sents a strong message to potential buyers and distributors that Chinese EVs are not welcomed in the US,” the statement reads.

Fortunately, he says, although Chinese EVs makers failed to grow in the US markets, they have so far received strong market responses in Europe and Southeast Asia.

He claims that while the US may be able to benefit from its protectionist policies in the short term, the global globalization trend will be irreversible over the long term. He advises American automakers to collaborate with Chinese manufacturers if they want to expand their businesses overseas. &nbsp,

However, the US is attempting to persuade its allies to follow suit and will tighten its sanctions against Chinese EV manufacturers. &nbsp,

Donald Trump, the Republican nominee for president, stated in a press conference on March 16 that he would impose 100 % tariffs on Chinese cars made in Mexico if he wins the election in November. &nbsp,

The Protecting American Autoworkers from China Act, which would increase the base tariff rate of all imported Chinese vehicles to 12 %, would be the result of a total tariff of 125 %. &nbsp,

‘ Trojan horse ‘

The Biden administration announced last month that it would look into Chinese-made smart cars that can collect sensitive data on US roads. Biden claimed that China’s vehicles could encircle the US market, posing a threat to US national security. &nbsp,

Prior to this, US Commerce Secretary Gina Raimondo stated in January that the country should consider whether or not it wants to have access to all the data collected by electric and autonomous vehicles.

She claimed that the details could include the vehicle’s driver, its location, and its surroundings. &nbsp,

Jim Saker, president of the Institute of the Motor Industry, told lawmakers in the United Kingdom on March 22 that China’s EVs flooding into Britain could be” the most effective Trojan Horse” at the Chinese Communist Party’s disposal. &nbsp,

He claimed that Beijing could remotely halt Chinese-made electric vehicles and bring Britain’s road traffic to a halt. He claimed that the UK is also in danger of being significantly compromised by the possibility of China stealing drivers ‘ information. &nbsp,

Beijing had complained that the US and the UK overreach out with regard to economic and trade issues.

Read: US calls Chinese EVs a possible security threat

Read: Trump’s tariffs to hurt Chinese automakers

Follow Jeff Pao on Twitter at&nbsp, @jeffpao3