[CTC] U.S.: China blocking ‘progress’ by advancing WTO dispute over IRA

[Arthur Stamoulis]

U.S.: China blocking ‘progress’ by advancing WTO dispute over IRA
Inside US Trade
By Hannah Monicken | July 26, 2024
 
The U.S. on Friday blocked China’s first request to establish a World Trade Organization dispute panel to assess a handful of Inflation Reduction Act tax credits, arguing that Beijing is attempting to “prevent progress” on climate change and “entrench” its own dominance in related sectors achieved through unfair non-market policies.
 
At a Dispute Settlement Body meeting on Friday, China requested the establishment of a panel, which the U.S. blocked. Washington cannot block a second request, which is likely to come at the next DSB meeting in September or earlier if Beijing chooses to call for a special meeting. China announced earlier this month <https://insidetrade.com/node/180560> that it would take this step following initial consultations on the issue Beijing said “failed to resolve the dispute.”
 
During the meeting, China called the IRA “probably the single largest subsidy measure ever enacted,” arguing its various credits and subsidies are likely to have trade-distorting effects and the specific credits in question in the dispute discriminate against Chinese goods, according to a copy of China’s remarks provided by the Chinese Mission in Geneva.
 
The U.S., however, countered that Beijing was standing in the way of progress for its own gain.
 
“The United States objects to China’s request to establish a panel against the Inflation Reduction Act (IRA), which seeks to undermine U.S. efforts to address the global climate crisis and build a more resilient clean energy supply chain,” a U.S. delegate said, according to a copy of remarks provided by the U.S. Mission in Geneva <https://insidetrade.com/sites/insidetrade.com/files/documents/2024/jul/wto2024_0786a.pdf>.
 
“China’s complaint is a regrettable attempt to prevent progress on these critical issues, to entrench reliance on China’s non-market excess capacity, and to undermine the broader interests of all WTO Members,” the U.S. added.
 
China is challenging five tax credits either created or beefed up under the IRA – the electric vehicle credit and four renewable energy-related credits. In its formal panel request <https://docs.wto.org/dol2fe/Pages/SS/directdoc.aspx?filename=q:/WT/DS/623-3.pdf&Open=True>, made public on July 16, Beijing said the credits violate the General Agreement on Tariffs and Trade, the Agreement on Trade-Related Investment Measures and the Agreement on Subsidies and Countervailing Measures.
 
Many IRA provisions are “deeply problematic,” Beijing said on Friday, but its dispute is limited to those it views as “clearly
prohibited” under WTO rules. “Increased protectionism is not a solution to this climate crisis,” China added.
 
The U.S. response is lengthy. It defends the IRA and outlines a number of China’s own policies Washington says are distorting the sectors in question in Beijing’s challenge to the IRA.
 
Such “non-market policies and practices undermine fair competition and cause global distortions in clean energy sectors – such as critical minerals, solar, wind, batteries, and electric vehicles – the very sectors that China has made the focus of this dispute,” the U.S. said.
 
“It is important to distinguish these unfair, anti-competitive non-market policies and practices from what the United States is doing with the IRA,” the U.S. added. “We are not targeting any sector, including the clean energy sector, for global or domestic dominance. We are not creating non-market excess capacity or an oversupply of clean energy products. We are not driving competitors out of business or preventing them from emerging.”
 
“Instead, the United States is engaging in desperately needed efforts to address the global climate crisis and build a resilient clean energy supply chain,” the U.S. continued.
 
China responded by saying it was “disappointed” by U.S. opposition, according to a Geneva-based trade official familiar with the meeting.
 
Also on Friday, the U.S. maintained its block on restarting the nomination process to fill vacancies on the defunct Appellate Body, saying, as it has repeatedly, that its “concerns remain unaddressed.”
 
WTO dispute settlement reform talks are ongoing, and several members during the DSB meeting urged negotiators to accelerate the discussions with the end-of-year deadline closing in, according to the Geneva official.
 
The next DSB meeting is set for Sept. 23. -- Hannah Monicken (hmonicken at iwpnews.com <mailto:hmonicken at iwpnews.com>)

Arthur Stamoulis
Citizens Trade Campaign
(202) 494-8826




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