China Gets WTO Panel to Probe US Inflation Reduction Act

This content was published on September 23, 2024 - 18:49

2 minutes

(Bloomberg) — China succeeded in its second attempt to establish a dispute panel at the World Trade Organization to review whether subsidies from the Inflation Reduction Act unlawfully favor US goods over imports.

The WTO’s dispute settlement body agreed on Monday to set up the committee after the US had blocked China’s first attempt to this end in July, according to a statement from the organization. The panel will rule on whether certain tax credits under the IRA — President Joe Biden’s flagship environmental and industrial policy — are compatible with international trade rules, the WTO said.

After the US had justified its actions in July as necessary to combat climate change, China argued Washington uses this as a pretense for protectionism, according to a Geneva-based trade official. The IRA discriminated against Chinese and non-Chinese products by requiring domestic content for subsidies.

The US responded by saying Beijing used the complaint to distract from its own practices harming fair competition, the official added. According to the US, these include overcapacity, forced labor, weak environmental protections, heavy subsidization and forced technology transfers.

The WTO recently said that China’s disclosures on its industrial subsidies are not complete and detailed enough to get a clear picture of how much the government supports domestic manufacturers. The US and the European Union previously moved to erect new trade barriers against Chinese imports, arguing that state help and overcapacity have damaged their domestic industries.