Volkswacht Bodensee - US appeals WTO ruling in dispute by China over clean energy subsidies

In its ruling last month, the global trade body's dispute panel said that large tax credits granted under former president Joe Biden's landmark climate law, the Inflation Reduction Act (IRA), were "inconsistent" with several WTO agreements and should be withdrawn.

That law, signed by Biden in 2022, was the largest climate investment in US history but it has been dramatically eroded since President Donald Trump came to power last year.

China launched its dispute at the WTO in March 2024, accusing Washington of unfair competition over its support for companies in the energy transition sector, and to electric cars manufactured on US soil.

The United States insisted at the time that the act was a tool to address the climate crisis and "invest in US economic competitiveness".

It was also meant to counter Beijing's subsidies for electric vehicles and the wider green industry within China, which has poured vast state funds into domestic firms as well as research and development.

At the time of the January 30 ruling in its favour, China had hailed it as "objective and impartial".

But US Trade Representative Jamieson Greer was harshly critical, saying that it showed that "existing WTO rules are inadequate to address massive and harmful excess capacity in numerous sectors, including in energy technology".

"Incredibly, the WTO report finds that the United States has broken WTO rules by defending industries that China unfairly targeted for global dominance, but does not say a word about the harms caused by China's industrial policies and massive excess capacity," Greer said, calling the ruling "absurd".

During a meeting of the Dispute Settlement Body (DSB) on Tuesday, the US representative echoed that criticism, charging that the panel of experts that drafted the report had taken "flawed legal shortcuts" and had avoided addressing what the US claims are China's non-market policies and dominance in renewable energy sectors.

The US maintained that the report undermined countries' efforts to protect workers and businesses from China's practices.

"For these reasons, the United States has notified an appeal of this report to the DSB," the representative said.

However, that appeal will now go "into the void", since the WTO's Appellate Body has remained paralysed since late 2019, after the United States during Trump's first term blocked the appointment of new judges.

F.Fehr--VB