China has initiated a dispute with the United States at the World Trade Organization (WTO) concerning specific tax credits under the US Inflation Reduction Act. These credits are designed to encourage the production of electric vehicles and renewable energy projects. The request for consultations was shared with WTO members on March 28, 2024.
China argues that these US tax credits favor domestic over imported goods or discriminate against Chinese-origin goods, which they claim is a violation of several agreements, including the General Agreement on Tariffs and Trade 1994, the Agreement on Trade-Related Investment Measures, and the Agreement on Subsidies and Countervailing Measures.
The request for consultations marks the formal start of a dispute at the WTO. This phase allows both parties to discuss the issue in hopes of reaching an amicable solution without advancing to litigation. If no resolution is found within 60 days, China may seek adjudication by a panel.
The World Trade Organization's primary role is to ensure smooth, predictable, and free trade flows between nations.