WTO Sets Up Panel on Dispute Over India’s EV Incentive Scheme

The World Trade Organization (WTO) has decided to establish a dispute settlement panel to examine China’s complaint over India’s electric vehicle and battery incentive policies.

AFP and Yonhap News Agency

Agence France-Presse Yonhap News Agency and Reuters reported on the 24th (local time) that the WTO held a meeting of its Dispute Settlement Body (DSB) and agreed to set up the panel. China argues that India’s incentive schemes in the automobile and renewable energy sectors constitute discriminatory measures against foreign companies and amount to trade restrictions.

The contested measures are reported to include various incentives that support the production of high-performance batteries, automobiles and auto parts, and electric vehicles.

Viewing these policies as discriminatory against Chinese products, China requested dispute consultations in October last year, the first step in the WTO’s dispute settlement procedure. When the consultations failed, China formally requested the establishment of a panel last month.

India opposed the establishment of a panel at the initial request stage, but under WTO rules a second request must be approved automatically, so the DSB accepted it.

At the meeting, India expressed regret over China’s request for a panel and insisted that its policies are in compliance with WTO agreements.

The United States also criticized China during the meeting. The U.S. side said China was "attempting to divert attention from its own non-market policies and practices and to justify its excess production," and pointed out that this undermines the broad interests of WTO members.

Meanwhile, the United States announced at the meeting that it would appeal a ruling that found its clean energy subsidies to be inconsistent with WTO agreements.

Earlier, a WTO dispute settlement panel ruled last month that some of the tax benefits under the Inflation Reduction Act (IRA), a core climate policy of the Joe Biden administration, are not in line with WTO agreements. In March 2024, China brought a case to the WTO, arguing that the IRA is discriminatory because it is designed to provide subsidies to products manufactured in the United States or to products imported from certain regions.

Jamieson Greer of the Office of the United States Trade Representative (USTR) criticized the ruling as a "ridiculous decision." He argued that the WTO is turning a blind eye to China’s industrial policies and overproduction issues while targeting U.S. measures.

However, Agence France-Presse pointed out that the U.S. appeal may have little practical effect. Since the first Trump administration, the United States has blocked the appointment of members to the WTO Appellate Body, leaving it effectively non-functional since 2019.