On the local time of Geneva on the 23rd, the World Trade Organization (WTO) Dispute Settlement Body agreed to the request to establish a panel on certain tax credits under the United States' Inflation Reduction Act (referred to as "DS623") during the relevant meeting.
On the same day, the European Union (EU) filed a consultation request with China under the WTO Dispute Settlement Mechanism regarding China's countervailing investigation into EU dairy products.
In response, the head of the Treaty and Law Department of the Ministry of Commerce stated that China has received the consultation request from the EU.
China regrets that the EU has submitted the countervailing investigation to the WTO Dispute Settlement Mechanism and will handle it in accordance with the relevant WTO rules.
On August 16, 2022, the Inflation Reduction Act was enacted into U.S. law.
Under the Inflation Reduction Act, the U.S. will provide nearly $400 billion in climate-related subsidies.
According to Xinhua News Agency, on March 26, 2024, China filed a lawsuit against the U.S. at the WTO, requesting consultations with the U.S. on measures related to new energy vehicle subsidies under the Inflation Reduction Act to protect the interests of Chinese new energy vehicle companies and maintain a fair competitive environment for the global new energy vehicle industry.
The subsidies targeted in the case include clean vehicle subsidies, energy property investment tax credits, clean electricity investment tax credits, production tax credits for renewable energy generation, and clean electricity production tax credits.
On July 15, 2024, China wrote to the Chairman of the WTO Dispute Settlement Body, requesting the establishment of a panel on certain tax credits under the U.S. Inflation Reduction Act.
However, at the Dispute Settlement Body meeting held in July this year, the U.S. rejected China's first request, citing that its actions were necessary to address climate change.
This time, China stated that the U.S. is using climate change as a pretext for protectionism and claimed that it is the U.S., not China, that is hindering global climate cooperation.
China pointed out that the subsidies under the Inflation Reduction Act favor U.S. goods rather than imported goods, violating WTO rules that prohibit such discrimination.
China also stated that the dispute involves measures by the U.S. to discriminate against Chinese and non-Chinese products through domestic content requirements for subsidies, thereby reducing consumer choice and increasing the cost of clean energy.
China also criticized the U.S. for justifying these subsidies as a solution to the so-called problem of China's overcapacity, stating that this argument is irrelevant to the case.
China emphasized that international trade in clean energy products is crucial for addressing the climate crisis and warned that U.S. protectionism undermines global efforts.
China reaffirmed its commitment to the principle of non-discrimination in international trade, believing that WTO rules can promote the achievement of global clean energy goals, and called for the establishment of a panel to address these issues.
The U.S. explained again that the Inflation Reduction Act is the most important step the U.S. has taken towards clean energy, aimed at ensuring the security and sustainable supply chain of the global clean energy future.
Ji Wenhua, a professor at the School of Law, University of International Business and Economics, said in a recent interview with First Financial Daily that China's appeal to the WTO Dispute Settlement Mechanism on measures such as new energy vehicle subsidies in the Inflation Reduction Act reflects China's respect for the WTO rule system.
If China obtains an authoritative ruling from the WTO in the future, China's questioning of the U.S.'s discriminatory measures will be more legally and morally justified.
Looking ahead, Ji Wenhua believes that the ideal state and optimal goal would be for the WTO to establish a complete trade framework or agreement to address climate change as soon as possible.
However, for the time being, this state of disorder full of doubts and challenges will continue for a while.
China has the responsibility to safeguard the legitimate demands and legal rights of domestic industries.
Previously, on July 29, 2024, the Ministry of Commerce received an official countervailing investigation application formally submitted by the China Dairy Association and the China Dairy Industry Association (referred to as "the applicants") on behalf of the domestic dairy industry.
The applicants requested a countervailing investigation into imported dairy products originating from the EU.
The Ministry of Commerce decided to initiate a countervailing investigation into imported dairy products originating from the EU starting from August 21, 2024.
The subsidy investigation period determined for this investigation is from April 1, 2023, to March 31, 2024, and the industry damage investigation period is from January 1, 2020, to March 31, 2024.
The scope of the products under investigation includes imported dairy products originating from the EU, specifically fresh cheese (including whey cheese) and curd, processed cheese (whether or not grated or powdered), blue cheese and other textured cheeses produced with Penicillium Roqueforti, other cheeses not elsewhere specified, and unsweetened and unflavored milk and cream (with a fat content exceeding 10% by weight).
It is reported that in the submitted application, the applicants claimed that the EU and its member state governments provided a total of 20 subsidy projects to the EU's dairy industry (enterprises).
According to statistics, among them, there are 7 subsidy projects under the EU's Common Agricultural Policy and 13 subsidy projects implemented by EU member states, involving member states such as Ireland (1 item), Austria (2 items), Belgium (1 item), Italy (2 items), Croatia (2 items), Finland (3 items), Romania (1 item), and the Czech Republic (1 item).
As mentioned earlier, the EU has filed a consultation request with China under the WTO Dispute Settlement Mechanism regarding China's countervailing investigation into EU dairy products.
The head of the Treaty and Law Department of the Ministry of Commerce stated that as a WTO member, China has always been cautious and restrained in using trade remedies to maintain fair and free trade.
The initiation of the countervailing investigation into EU dairy products is based on Chinese law and initiated in response to domestic industry applications.
China has the responsibility to safeguard the legitimate demands and legal rights of domestic industries.
