On 14 August 2024, the World Trade Organization (WTO) informed that the People’s Republic of China (China) had requested WTO dispute consultations with the European Union (EU) regarding the EU’s anti-subsidy investigation on imported battery electric vehicles (BEVs) from China and the subsequent imposition of provisional countervailing duties on the targeted vehicles. The request was circulated to WTO members on the day.
China claims that the measures in question appear to be inconsistent with Article VI of the General Agreement on Tariffs and Trade 1994 (GATT1994) and various provisions of the WTO’s Agreement on Subsidies and Countervailing Measures (SCM).
Background
The BEV industry is an important part of China-EU trade and investment relations. Many EU BEV producers have invested in China and then exported products to the EU. These EU BEV producers have shared the benefits of developing China’s BEV industry. The cooperation between Chinese and EU BEV producers demonstrates the healthy economic and trade relationship between China and the EU and the openness and dynamism of the BEV industry in China.
However, on 4 October 2023, the EU launched an anti-subsidy investigation on BEVs imported from China that were designed for passengers. The launching of this investigation is protectionist in nature. The protectionist motives of the EU become evident from the various irregularities in the initiation and the conduct of the Commission, as well as the absence of any concrete evidence regarding alleged subsidisation in China.
China considers that during the investigation's initiation, conduct and decision-making process – particularly in the context of the provisional measures imposed on 03 July 2024 – the EU acted inconsistently with the WTO Agreements in both procedural and substantive aspects. The Commission’s actions and omissions demonstrate a clear bias in the acceptance, use and assessment of evidence based on its provisional measure.
The transition in the vehicle industry from traditional passenger cars to BEVs is an inevitable historical trend, in keeping with the twin goals of industrial upgrading and achieving carbon emission reduction. This transition also aligns with the interests of global consumers. The provisional measures imposed by the EU on Chinese BEVs will obstruct the development of an industry that benefits global stakeholders and consumers. China submits that the measures adopted by the EU violate its obligations under several provisions of the covered WTO Agreements.
The measures at issue
The measures at issue concern the provisional countervailing duty measures imposed by the EU as the result of its investigation into BEVs from China. The Commission initiated the anti-subsidy investigation via the Notice of initiation of an anti-subsidy proceeding concerning imports of new battery electric vehicles originating in China designed for transporting persons, dated 04 October 2023. The Commission imposed provisional countervailing duty measures through Commission Implementing Regulation (EU) 2024/1866 of 03 July 2024, imposing a provisional countervailing duty on imports of new battery electric vehicles originating in China designed for the transport of persons.
The measures at issue include the determination by the Commission to initiate the investigation at issue, the consultations for the investigation, the conduct of the investigation, the preliminary affirmative determination on the alleged subsidisation, injury and threat of material injury and causation, and the imposition of provisional countervailing duty measures. This request also covers any future action or measures the EU may take concerning these measures.
What is a request for consultations?
The request for consultations formally initiates a dispute in the WTO. Consultations give the parties an opportunity to discuss the matter and to find a satisfactory solution without proceeding further with litigation. After 60 days, if consultations have failed to resolve the dispute, the complainant may request adjudication by a panel.