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WTO AND US–CHINA CLEAN ENERGY DISPUTE
UPSC Daily Current Affairs
May 30, 2024
WTO AND US–CHINA CLEAN ENERGY DISPUTE
What Is the US–China Clean Energy Dispute?
• The dispute involves competition between the United States and China in the clean energy sector.
• China challenged the US Inflation Reduction Act (IRA) at the World Trade Organization (WTO).
Why Is This Important?
• Both the US and China are leading economies and major investors in clean energy.
• Their competition impacts global efforts to reduce greenhouse gas emissions.
What Is the US Inflation Reduction Act (IRA)?
• The IRA is a US law with a budget of $369 billion for clean energy and climate programs.
• It provides tax credits favoring domestic over imported goods, aiming to reduce reliance on Chinese products.
What Are China’s Claims?
• China claims the IRA violates three WTO agreements by implementing illegal trade-related investment measures and subsidies.
• These actions, China argues, breach principles of national treatment and most-favored-nation treatment.
How Has the US Responded?
• The US has agreed to hold WTO consultations with China.
• The US may argue the IRA supports public and environmental health and national security under specific WTO provisions.
What Are the Potential Outcomes?
• The WTO’s dispute settlement system is currently limited due to the US blocking the appointment of Appellate Body members.
• This creates uncertainty about the resolution of the dispute.
Why Does This Matter for Global Trade?
• The dispute highlights challenges in balancing ambitious climate policies with multilateral trading rules.
• It raises concerns about discriminatory trade measures and the effectiveness of the WTO.
What Is the Broader Impact?
• The dispute underscores the need for clear rules on green industrial policies and effective dispute resolution.
• Cooperation between the US and China remains crucial for global clean energy efforts.
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