China has appealed to the WTO over tariffs on electric vehicles introduced by the European Union

China filed a complaint with the World Trade Organization over the European Union’s final tariffs on Chinese electric car imports, escalating a dispute that is worsening already strained relations between the exporting nations.

Beijing referred the case to the WTO’s dispute settlement mechanism on Monday (Nov 4) to “protect the development interests” of the electric vehicle industry, according to a statement from the Ministry of Commerce. The ministry reiterated its strong stance against EU tariffs, criticizing the levies as “trade protectionism in the name of compensation”.

China’s official complaint raises the risk of an increased confrontation over an eye in a relationship estimated at $806 billion in two-way trade in goods in 2023. The bloc defended the tariffs, saying they were a byproduct of an investigation into Chinese state subsidies that unfairly benefit the sector.

“China believes that the EU’s final decision on anti-subsidy measures has no factual and legal basis, violates WTO rules and is an abuse of trade measures,” the ministry’s representative said in a statement. “We call on the EU to face up to its mistakes and immediately correct its illegal practices, and jointly support the stability of the global EV supply chain and China-EU economic and trade cooperation.”

After months of negotiations, threats of retaliation and lobbying by the auto industry, the EU last week published a regulation in its official journal that imposes tariffs of up to 45% on imports of Chinese electric cars, temporarily effective from July.

The EU and its second goods trading partner have held discussions aimed at finding alternative solutions even after the tariffs take effect, but the talks have so far failed to produce a breakthrough.

The bloc decided to send officials to Beijing for further talks, Bloomberg reported last week. The two sides have been exploring whether an agreement could be reached on so-called price commitments, a complex mechanism to control prices and volumes of exports used to avoid tariffs. Both Brussels and Beijing have indicated that differences remain significant. BLOOMBERG