China Opens WTO Dispute on EU's CV Duties on Electric Vehicles

China officially requested dispute consultations with the EU on its provisional countervailing duties on Chinese electric vehicles, the World Trade Organization announced Aug. 14. China said the duties and general CVD investigation violate Article VI of the General Agreement on Tariffs and Trade 1994, which covers antidumping and countervailing duties, and the Agreement on Subsidies and Countervailing Measures.

The consultations give the parties 60 days to reach a solution, after which China may request a dispute settlement panel.

The EU imposed provisional duties in June after finding that China unfairly subsidized its EV industry (see 2406120008). The European Commission imposed a 17.4% rate on exporter BYD, 20% on Geely and 38.1% on SAIC. Other Chinese EV makers that took part in the investigation received a 21% rate, while non-cooperating exporters got a 38.1% rate.

In its request for consultations, China alleged three types of trade rules violations: procedural errors, inconsistencies related to the subsidization finding and inconsistencies in the "determination of alleged injury and the causal relationship." The commission made findings that Chinese EV makers received subsidies through "preferential financing," Chinese grants and fiscal subsidy policy, the provision of goods and services for less than adequate remuneration and tax exemptions.

China challenged the commission's findings on all fronts, claiming that the commission failed to show that a benefit was "conferred" for many of the subsidies or was directed by a government body or entity. China also said the commission "failed to conduct an objective examination, based on positive evidence, of the volume of the allegedly subsidized imports and the effect of the subsidized imports on prices in the domestic market for like products."

The commission allegedly also "failed to examine all known factors to demonstrate the existence of a causal relationship between the allegedly subsidized imports and the threat of material injury," China said.