Tag Archives: WTO

China Against United States at the World Trade Organization

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China filed a complaint in March 2024  at the World Trade Organization over the U.S.’s Inflation Reduction Act, saying that it was discriminatory and distorted fair competition.  Under the Inflation Reduction Act, which President Biden signed into law in August 2022, consumers in the U.S. won’t be able to claim a $7,500 clean-vehicle tax credit if they buy cars containing battery components from a “foreign entity of concern” starting in 2024. The policy will extend to the minerals that go into battery components in 2025. The move was seen by industry players as a way to reduce China’s role in the U.S. EV-industry supply chain.

The definition covers any firm based in China, including subsidiaries of U.S. companies, as well as companies elsewhere that are 25% or more owned by state-backed entities from China. The rules also apply to Iran, North Korea and Russia. In February 2024, Biden ordered the U.S. Commerce Department to open an investigation into foreign-made software in cars, citing Chinese technology as a potential national-security risk. The probe could lead to restrictions on the use of certain parts in cars in the U.S.

In 2023, China became the world’s biggest car exporter, surpassing Japan and Germany, while China’s EV maker BYD overtook Tesla  to become the bestselling pure EV maker in the world in the fourth quarter of 2023.

Excerpts  from Sha Hua, China Files WTO Complaint Against U.S. Over Electric-Vehicle Subsidies, WSJ, Mar. 26, 2024

WTO and the Level Playing Field: Europe v. Russia

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Europe’s trade chief threatened to take Russia to the World Trade Organization over a string of restrictive practices saying Moscow needed to play by the rules now it was a member of the global body.  Trade Commissioner Karel De Gucht singled out Russia’s ban on European live animal imports, plans to levy fees on imported vehicles, two anti-dumping cases and another trade defense case launched by Moscow against Europe in recent months.  In the same week that the European Commission opened an investigation into Russia’s Gazprom and China’s solar panel exports, De Gucht said the measures sent “the wrong signal”, Reuters reports.

“Membership of the WTO means a country is subject to the dispute settlement mechanism of that organization,” he told an EU-Russia seminar in Helsinki. “Russia should understand that Europe takes that mechanism very seriously and that we will not hesitate to enforce our rights where they are violated,” he added.

Russia joined the WTO last month after an 18-year wait. President Vladimir Putin said on Wednesday the country would use its membership to try to develop freer trade across the world, but he’ll also be hoping it will further boost the energy-driven $1.9 trillion economy.  De Gucht said Russia was violating WTO rules by keeping its markets closed to competitors.  “What these and other measures … have in common is that they affect products where significant market opening is due to take place under Russia’s WTO commitments,” De Gucht said.  “This is the wrong signal to send at a time when liberalization is supposed to be moving forward.”

Russia and the EU are deeply intertwined, with Europe relying heavily on Russian energy exports and Russians hungry for EU products and access to its 500 million consumers.  But the two sides argue over issues ranging from energy supplies, trade and market access to human rights. While relations are at times frosty, both refer to each other as “strategic partners” and meet for twice-yearly summits.  Negotiations between Russia and the EU towards closer economic and political ties have also stalled, and Brussels is concerned by Putin’s plan to develop a “Eurasian union” of ex-Soviet states, including Kazakhstan and Belarus.

EU warns Russia to play by WTO rules or face action, Reuters, Sept. 7, 2012

Russian President Vladimir Putin signed a decree giving the government the right to protect its natural gas-export monopoly, OAO Gazprom (GAZP), from an anti-trust inquiry by the European Union.  Putin’s measure bans strategic companies from disclosing information, disposing of assets or amending contracts without government approval in case claims are made by foreign states or entities, the president’s office said in an e-mailed statement from Moscow today. The Russian leader on Sept. 9 warned the EU, which relies on Russia for a quarter of its gas needs, that there would be “losses on both sides” if the issue isn’t resolved. He accused the 27-nation bloc of trying to shift responsibility for subsidizing former communist EU members onto Russia by forcing Gazprom to cut prices for customers in eastern and central Europe.

Excerpt, By Henry Meyer, Putin Moves to Protect Gazprom From EU Pricing Dispute, Bloomberg, Sept. 11, 2012