China Accuses Biden Of Blocking Batteries

What Chances Does the IRA Have Now After Other Countries’ Precedent?

Once again, China is challenging President Joe Biden’s EV plans, asserting that his aim of excluding the world’s second-largest economy from the American EV supply chain breaches World Trade Organization regulations. Automotive News reported that China declared that the Biden administration’s efforts to lessen the amount of Chinese materials in batteries that are eligible for tax credits under the Inflation Reduction Act “violates the WTO’s basic principles,” further noting that this will disrupt global supply chains. This same argument was previously presented by Japan and other countries before the IRA gained traction. Despite the restrictions being implemented, why would this argument be valid now?

The President has been tightening the screws on dealings with China, proposing drastic consequences for investors in the US electric vehicle (EV) industry who are determined to possess any fraction of essential supplies sourced from China or other nations regarded by the US as a potential risk, such as Russia, North Korea, and Iran.

Legislators in Washington have already enacted two separate statutes which specifically exclude investors from gaining tax advantages for storehouses of batteries and specialized ores that are part of the making process, as well as benefits affiliated with fresh EV buys. Furthermore, the Biden management is attempting to push stricter requisites for figuring out if a company is restricted by an overseas body that may be disquieting, such as China’s CATL which Ford has entered into an important arrangement with.

China has expressed its disapproval of the US policy of targeting Chinese enterprises by excluding their products from a subsidy’s scope. According to Commerce ministry spokesperson He Yadong, this policy is “typical non-market orientated policy”. Many countries that are members of the World Trade Organization, including China, have raised their concerns about the discriminatory policy of the US, which violates the fundamental principles of the WTO.

“The US’ implementation of ‘glass barriers’ is proving to be detrimental to the growth of EV technology and the industry as a whole,” stated [Name], continuing to explain that these steps could “gravely interfere with international trade and investment.” [Name] went on to say that this could have “a disastrous effect on the development of EV technology.”

News of the restrictions is already having an effect on the Ford Mustang Mach-E. According to the Blue Oval, the electric vehicle is statistically unlikely to comply with the sourcing laws coming into force in the new year.

Dan Marks, a research analyst for energy security at Royal United Services, acknowledges that China’s dominance of global battery supply chains is an issue of concern. However, he believes that the current steps taken may not be enough, noting that he is “not sure the measures the EU or the US are considering match the scale of the risk.” Both Europe and the US are apprehensive about the potential influx of Chinese EVs, and Marks worries that, without the correct strategic plan, industries in those regions may not be able to endure.

It is unclear what the effects of the World Trade Organization will be, yet strains are escalating.