Geneva: The World Trade Organization (WTO) has agreed to form a panel to examine China's complaint regarding U.S. subsidies for electric vehicles (EVs), following Beijing's accusations that Washington's policies create unfair competition in the global EV market.

China initially lodged the complaint in March, claiming that the U.S. Inflation Reduction Act (IRA) discriminates against foreign-made new energy vehicles, which include electric cars and hybrids. The IRA, passed in 2022, provides substantial subsidies to U.S.-manufactured electric vehicles as part of broader efforts to address climate change and enhance U.S. economic competitiveness.

Beijing asserts that these subsidies disrupt global supply chains and violate WTO regulations. The Chinese government has also voiced concerns over the act's impact on international competition, arguing that it distorts the market for new energy vehicles.

The U.S. sharply rebuked China's claims, accusing Beijing of using the WTO dispute to distract from its own policies that allegedly distort market competition. Washington emphasized that the IRA is essential for addressing the climate crisis and ensuring the U.S. remains competitive in the clean energy sector, while also countering China's extensive state-backed support for its green energy industries.

During a WTO meeting on Monday, the U.S. representative stated that Washington would "vigorously defend" the IRA’s clean energy tax credits and argued that existing WTO rules should not prevent member nations from taking actions to address urgent global issues, including climate change.

The WTO’s decision to move forward with an expert panel highlights the growing trade tensions between the world’s two largest economies, which are already entangled in disputes over tariffs, technology, and economic competition. The U.S. recently announced a quadrupling of tariffs on Chinese EV imports, further fueling the rivalry.