According to a report on the Ministry of Commerce website on September 6, China has filed a lawsuit with the World Trade Organization (WTO) against Canada's tax measures on electric vehicles and steel and aluminum products.
The spokesperson for the Ministry of Commerce stated that on September 6, China requested consultations with Canada at the WTO regarding the additional tax measures imposed on Canadian electric vehicles and steel and aluminum products.
The spokesperson expressed that Canada, disregarding WTO rules and violating its commitments within the organization, is planning to impose additional taxes of 100% and 25% respectively on Chinese electric vehicles and steel and aluminum products. Such actions are typical of unilateralism and trade protectionism, severely damaging the rule-based multilateral trading system, and disrupting the global supply chains of electric vehicles, steel, and aluminum. China is firmly opposed to this.
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The spokesperson emphasized that China is a staunch supporter and significant contributor to the multilateral trading system, urging Canada to abide by WTO rules and immediately correct its erroneous practices.
Zhou Xiaoyan, Vice President of the China International Investment Promotion Agency, previously stated to reporters from Yicai that both China and Canada are WTO members, and Canada's direct imposition of a 100% import tariff on Chinese electric vehicle products clearly violates the non-discrimination principles and related rules of the WTO. China has the right to file a lawsuit with the WTO against Canada's actions to protect the legitimate rights and interests of China, especially Chinese enterprises.
Canada Disregards WTO Rules
Recently, the Canadian government announced plans to impose a 100% additional tax on imported electric vehicles from China starting from October 1, 2024, and a 25% tariff on steel and aluminum products from China starting from October 15.
Liang Ming, Director and Researcher at the Institute of Foreign Trade under the Academy of International Trade and Economic Cooperation of the Ministry of Commerce, previously introduced to Yicai reporters that the Canadian additional tax measures on Chinese goods involve three categories: electric vehicles, steel, and aluminum. Specifically, electric vehicles cover 23 tariff items, steel covers 163 tariff items, and aluminum covers 19 tariff items, totaling 205 tariff items.
Liang Ming believes that Canada's actions have a clear political motive and are blindly following the United States. The related actions are even worse than those of the United States. For instance, the United States has imposed a 100% tariff on only 8 tariff items of Chinese electric vehicles, while Canada has 23. The impact of Canada's measures on the export of related Chinese goods is even greater than that of the United States.
"In terms of additional tax rates, Canada blindly follows the United States without conducting its own research and investigation, extremely subjectively setting a high rate of 100% for our electric vehicles. In contrast, the United States and the European Union, under the so-called 'legal' guise, have conducted investigations on related measures. Canada's measures are extremely subjective, malicious, and unscrupulous," said Liang Ming.As of now, the China Chamber of Commerce for Import and Export of Machinery and Electronic Products, the China Nonferrous Metals Industry Association, and the China Iron and Steel Industry Association have all expressed "strong opposition" to this. The China Chamber of Commerce for Import and Export of Machinery and Electronic Products stated that the Canadian measures are the most extensive and heaviest in terms of taxes imposed on Chinese electric vehicle models to date.
On September 3rd, in response to questions from journalists regarding Canada's trade restrictive measures against China, the spokesperson for the Ministry of Commerce expressed that Canada, disregarding objections and dissuasions from various parties, has adopted discriminatory unilateral restrictive measures against imported products from China. China is strongly dissatisfied and firmly opposes this, and intends to bring Canada's relevant practices to the WTO dispute settlement mechanism.
Furthermore, in accordance with Article 7 and Article 36 of the "Foreign Trade Law of the People's Republic of China," China will initiate an "anti-discrimination investigation" against the restrictive measures taken by Canada, and will take corresponding measures against Canada based on the actual situation. At the same time, China will, in accordance with domestic laws and regulations and in compliance with WTO rules, legally initiate an anti-dumping investigation on imported canola seeds from Canada. China will also, upon application from domestic industries, initiate anti-dumping investigations on related chemical products from Canada.
Experts: Canada's move severely violates three fundamental principles of the WTO
Liang Ming explained that the fundamental principles of the WTO can be summarized as "non-discrimination," "fair trade," and "transparency." Canada's actions severely violate these three basic principles of the WTO, blatantly challenging the international trade order. "Canada's behavior is blatant trade protectionism, a unilateral measure that seriously violates WTO rules, and an act that harms others without benefiting itself," he stated.
The China Chamber of Commerce for Import and Export of Machinery and Electronic Products expressed shock and confusion in its position paper regarding the Canadian measures. Currently, China's export of electric vehicles to Canada is still in its infancy and is welcomed by the market. The Canadian government, disregarding the feedback from businesses and consumers in public consultations, has enacted this discriminatory measure solely targeting Chinese electric vehicles, which seriously violates WTO rules and disrupts the global green transformation and development process. The China Iron and Steel Industry Association also stated that the Canadian government, without investigation, has made a unilateral decision to impose taxes on Chinese steel products, undermining the multilateral trade system based on WTO rules and having a negative impact on global steel trade and the development of the steel industry.
Liang Ming said that China has always been a defender, builder, and contributor to the multilateral trade system. Despite the extremely egregious actions of Canada, all measures taken by China will follow international law and WTO rules and will be carried out within the scope of compliance and legality.
Assistant Professor of International Trade Law at the Law School of the London School of Economics and Canadian lawyer Mona Paulsen once questioned the Canadian government's approach on social media: "Canada should have implemented safeguard measures and maintained its commitments to the WTO. The safeguard rules of the WTO require proof that increased imports have caused damage to the industry. Safeguard measures are temporary restrictions and must be based on most-favored-nation treatment, not like this (imposing additional tariffs on China without investigation)."
Paulsen also said: "The reasons for Canada's additional tariffs on steel and aluminum are not justified under WTO rules. The decision to address trade diversion through restrictive measures goes against the original intention of trade rules - the purpose of these rules is to prevent a vicious cycle of restrictive measures."
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