EU’s possible WTO case against US act shares intl concerns

The EU’s possible filing of a complaint over the US’ so-called Inflation Reduction Act (IRA) at the WTO represents widespread global concerns, including those of China, for the foreseeable damage that US subsidies will have on global free trade and a level playing field, experts said.

The EU’s move mirrors the rising dissatisfaction of the closest allies of the US and the division of the West, driven by the fact that the US is pursuing its own national interests at the expense of others, Chinese experts noted.

The head of the European Parliament’s Trade Committee, Bernd Lange, said on Sunday that the bloc should file a complaint with the WTO over the IRA, which was passed by the US Congress in August, Deutsche Welle (DW) reported on Sunday.

The latest move showed that the EU is dissatisfied with the practice of the US, which provides subsidies at the expense of others for its own national interests, said Bai Ming, deputy director of the international market research institute at the Chinese Academy of International Trade and Economic Cooperation.

The IRA provides up to $369 billion in government subsidies to support sectors such as electric vehicles, key minerals and clean energy, with as many as nine tax incentives based on production and sales in the US or North America as a prerequisite.

Some provisions in the act that intend to limit China have also met with opposition by the EU, because of its large investments in China, Bai said.

The EU’s intended move came in response to the demands of its companies, which are under pressure from the US subsidies. Although the EU has conveyed this to the US, it seems that it has not received a response, which is pushing it to solve this problem through the WTO, said Gao Lingyun, an expert at the Chinese Academy of Social Sciences in Beijing.

However, the IRA has already been adopted, and it will definitely not be repealed. The EU is well aware of this, but it seems that it must offer some resistance, Gao said. “Even if the EU does file a complaint and the WTO rules in its favor, rulings by the WTO are not binding,” he said.

The most obvious outcome is the destruction of global confidence and the level playing field, experts said.

China shares the same concerns as the EU on these subsidies, because they harm the common interests of global traders’ players, experts said.