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TWN
Info Service on WTO and Trade Issues (Apr24/03) Geneva, 27 Mar (D. Ravi Kanth) — China on 26 March launched dispute settlement proceedings against the United States at the World Trade Organization over alleged “discriminatory” subsidies, including subsidies contingent upon the purchase and use of goods from the US, under Washington’s Inflation Reduction Act (IRA) that allegedly violates the WTO’s core provisions on national treatment as well as most-favored-nation (MFN) treatment. According to an email sent to the SUNS, China indicated that another discriminatory condition specified by the US for availing of IRA subsidies required the US companies to import products from its neighbours involved in re-shoring, or certain particular regions. The Biden administration has justified the IRA subsidies for addressing climate change, reducing carbon emissions, and protecting the environment. China alleged that the subsidy measures not only exclude goods from China and other WTO members, but worse still, they also “distort fair competition and seriously disrupt the global industrial and supply chain, which are contrary to the WTO rules including but not limited to national treatment and most-favored-nation treatment.” As a first step, China has requested consultations with the US under Article 4 of the WTO’s Dispute Settlement Understanding (DSU) to address the specific charges levelled against the US in its complaint. The US is required to respond to the claims raised by China in its complaint within 30 days. If the consultations fail to settle the dispute within 60 days, or if during the 60 days, the consulting parties jointly consider that the consultations have failed, the complaining party, i.e. China may request the establishment of a panel. In its email, Beijing reiterated its commitment to the “rules-based multilateral trading system and respects the legitimate rights of the WTO members to adopt industrial policies, including subsidies, to promote economic and social development in a way that is in accordance with the WTO rules.” It urged Washington to obey its WTO obligations and recognize the trend of industrial development, and to remove its discriminatory measures immediately. In contrast to the Chinese complaint, for the past several years, the US, the European Union, and Japan have raised specific charges against China’s scheme of state-owned subsidies, as well as subsidies to promote industries in targeted sectors like batteries, electric vehicles, and solar panels, among others. Though the US has not launched a specific trade dispute against China on these issues, it remains to be seen how it would respond to the Chinese complaint, said people familiar with the development.
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