China Formally Files WTO Dispute on EU CV Duties on Chinese EVs

China formally filed a dispute at the World Trade Organization on Nov. 6 challenging the EU's definitive countervailing duties on new battery electric vehicles from China. The request for consultations continues a dispute China started on the EU's provisional CV duties on Chinese EVs (see 2408140010).

China structured its dispute on the definitive duties slightly differently than its claims on the provisional duties, grouping its claims into two categories: substantive and procedural inconsistencies.

The request for consultations alleged various substantive errors committed by the EU, including in its decisions to countervail alleged preferential financing to EV makers and the provision of inputs and land-use rights below cost. China said that for all these subsidies, the bloc wrongly found financial institutions and input suppliers to be public bodies or private bodies instructed by the Chinese government, and that the EU improperly used "out-of-country benchmarks" that don't reflect market conditions in China.

China also challenged the EU's finding that China's fiscal subsidy policy and grants to EV makers led to countervailable subsidies. The request for consultations said China's fiscal subsidy expired at the start of the investigation period, and that the EU failed to show that the grants were specific.

The dispute also contested the EU's finding that the Chinese government chose to forgo revenue through a tax exemption and reduction for EV makers, and its sampling of Chinese EV exporters and definition of the EU domestic industry.

China also said the EU failed to establish the existence of a threat of injury and causal link between Chinese EV shipments and injury to the domestic industry. China said the bloc failed to "undertake an objective examination" of the volume of the imports and their prices.

As for the alleged procedural inconsistencies, China said the EU didn't properly show the "existence of special circumstances and sufficient evidence regarding the existence of alleged subsidization, injury and a causal link" to start the investigation. Beijing also impugned the EU for failing to "hold good faith consultations" with China before opening the investigation, as well as for illicitly expanding the scope of the investigation.

Beijing also complained of the EU's use of facts available, its "excessive confidentiality" and alleged "failure to inform the Government of China and all other interested parties of the essential facts under consideration." The dispute bemoaned the EU's requirement that the Chinese government conduct part of the investigation.