China sues the EU over EV duties

China said on Monday it had launched a dispute at the World Trade Organization against the EU’s definitive duties on Made-in-China electric vehicles.

Beijing had threatened to do so last week, after the EU finalized its decision to impose duties of 8 percent to 35 percent on Chinese EV brands. The duties came after a year-long investigation found that Chinese manufacturers had benefited from unfair subsidies.

The Chinese Commerce Ministry said that “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.”

A WTO official confirmed the complaint had been lodged.

“We can now confirm that a request from China for consultations with the European Union regarding the EU’s definitive countervailing duties on electric vehicles has been received,” the official said.

This new request covers the EU’s definitive measures, its investigation and the provisional measures, which were the subject of an earlier dispute launched by China on Aug. 9.

It’s the latest salvo in escalating trade tensions between Beijing and Brussels. The EU is meanwhile expected to imminently send a negotiating team to China in a bid to find a compromise with Beijing under which manufacturers would make minimum price undertakings that would render the duties moot.

China is asking for consultations with the EU, the first step in any WTO dispute settlement, which will last for 60 days before a panel might be requested to adjudicate on the dispute. However, the WTO’s highest appeal body is out of action due to a lack of judges caused by U.S. frustrations with the organization.

However, China and the EU could settle their case through the back-up system, known as MPIA, of which they both are members.

Additional reporting by Koen Verhelst.