China files WTO lawsuit against EU

China has filed a lawsuit with the World Trade Organization (WTO) over measures imposed by the European Union (EU) on electric vehicles (EVs) made in the Asian country.

The EU has finalized a decision to impose tariffs ranging from 8% to 35% on Chinese EV imports for a period of five years. The ruling last week concluded a year-long investigation by Brussels, claiming that China benefits from unfair subsidization. The new levies will be imposed in addition to the EU’s standard 10% import duty on cars.

The Chinese Ministry of Commerce stated on Monday that “China firmly opposes” the decision and, “in order to safeguard the development interests of the electric vehicle industry and global green transformation cooperation, China has decided to file a lawsuit against the EU’s final anti-subsidy measures.”

“It is regrettable to see the European side announcing the final rulings to impose high countervailing duties on Chinese EVs despite numerous objections by relevant parties, ranging from governments of EU member states, to industries, and the public,” the ministry added.

The EU decision lacks factual and legal basis, violating WTO rules, the ministry’s spokesperson said in the statement. They described the ruling as trade protectionism in the name of imposing countervailing duties.

Brussels has argued that the tariffs are necessary to protect European carmakers from unfair competition, as it claims Chinese manufacturers benefit from state subsidies. However, some of the bloc members, including Germany and Hungary, have strongly opposed the introduction of tariffs.

The EU is the largest overseas market for Chinese EV makers. The value of EU imports of Chinese electric cars surged to $11.5 billion in 2023, from just $1.6 billion in 2020, accounting for 37% of all EV imports to the bloc, according to recent research.

Beijing has repeatedly warned that the EU could trigger a “trade war” if it continues to escalate tensions. The Chinese government accused the bloc of unfair practices during the anti-subsidy probe, and responded by imposing provisional tariffs on brandy originating from the EU, as well as launching an anti-dumping investigation in relation to certain pork and dairy products from the bloc.

The EU’s decision followed a move by the US to raise its tariff on Chinese EVs from 25% to 100% in May.