China launches WTO dispute over tax credits under US IRA

China has filed a request for dispute consultations with the US at the World Trade Organisation (WTO) concerning certain tax credits introduced under the US Inflation Reduction Act (IRA) in support of electric vehicles (EVs) and renewable energy projects.

In the request, dated March 26 and circulated to WTO members on March 28, China claims that the tax credits favour domestic goods over imports, or discriminate against products of Chinese origin.

The document says that IRA’s modified investment tax credit (ITC) and production tax credit (PTC) for renewable energy projects include bonus subsidy elements that are contingent upon the use of domestic over imported goods.

The consultation request initiates a dispute in the WTO. The parties have 60 days to try to resolve the dispute, after which the complainant may request adjudication by a panel.

US Trade Representative Katherine Tai said on March 26 that the US is carefully reviewing the 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. 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,” Tai’s statement reads.

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