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US-China Electric Vehicle Dispute Shows Old Trade Rules Imperil Climate Action
"The climate crisis is too urgent for the U.S. or any country to allow outdated trade rules... to distract us from enacting bold climate policies," argued one campaigner.
Mar 26, 2024
As the Chinese government on Tuesday formally challenged what it termed "discriminatory" U.S. electric vehicle subsidies, climate action advocates warned that antiquated trade policies and international bickering must not be allowed to hamper the urgently needed green energy transition.
"Immediate climate action must take priority over compliance with outdated trade rules that were inked long before governments worldwide began taking the climate crisis seriously," said Trade Justice Education Fund executive director Arthur Stamoulis in response to the move by Beijing.
Melinda St. Louis, director of Public Citizen's Global Trade Watch, agreed that "the climate crisis is too urgent for the U.S. or any country to allow outdated trade rules—written long before governments were taking climate change seriously—to distract us from enacting bold climate policies."
"Existing trade rules need to be rewritten so that trade pacts can become tools for helping the world advance towards a clean, just, and sustainable economy—but we don't have time to wait."
China—which has heavily subsidized its own electric vehicle industry—on Tuesday filed a complaint against the United States at the World Trade Organization (WTO), taking aim at rules for EV tax credits included in the Inflation Reduction Act (IRA), a sweeping package signed by President Joe Biden in 2022.
"Under the pretext of 'responding to climate change' and 'environmental protection,' the U.S. has formulated discriminatory policies through its Inflation Reduction Act regarding new energy vehicles, excluding products from China and other WTO members from subsidies," said a Chinese Ministry of Commerce spokesperson, according to a translation by the South China Morning Post.
"Such exclusions distort fair competition, disrupt global industrial and supply chains, and violate WTO principles such as national treatment and most-favored-nation treatment," added the spokesperson. "We urge the U.S. to abide by WTO rules, respect the development trend of the global new energy vehicle industry, and rectify its discriminatory policies."
U.S. Trade Representative Katherine Tai said that "we are carefully reviewing the consultation request" and called out the People's Republic of China for using "unfair, nonmarket policies and practices to undermine fair competition and pursue the dominance of the PRC's manufacturers both in the PRC and in global markets."
Tai also praised "President Biden's leadership," represented by the passage of the IRA, which she described as "a groundbreaking tool for the United States to seriously address the global climate crisis and invest in U.S. economic competitiveness." She said the U.S. would "continue to pursue major new investments in clean energy technology, from solar and wind to batteries and electric vehicles and beyond."
The Associated Pressreported Tuesday that "the real-world impact of the case is uncertain. If the United States loses and appeals the ruling, China's case likely would go nowhere. That is because the WTO's Appellate Body, its supreme court, hasn't functioned since late 2019, when the U.S. blocked the appointment of new judges to the panel."
St. Louis said that "China's threatened trade attack against climate provisions in the U.S. Inflation Reduction Act is another example of why the U.S. and other nations should begin working with one another towards an immediate moratorium on the use of trade challenges against clean energy transition and other climate measures."
"We've been warning since before the passage of the Inflation Reduction Act that antiquated WTO rules would threaten our ability to realize the green transition," she noted. "Prominent labor, environmental, and consumer groups have urged the U.S. government to boldly implement the IRA as intended despite trade pact attacks—and to make a commitment not to use such trade rules to challenge other countries' climate policies."
Stamoulis pointed out that "governments worldwide are wasting considerable amounts of time and political capital attempting to squeeze potential climate measures into compliance with outdated trade and investment rules."
"Ultimately, existing trade rules need to be rewritten so that trade pacts can become tools for helping the world advance towards a clean, just, and sustainable economy—but we don't have time to wait," he continued. "A 'climate peace clause' that brings an immediate end to the ongoing trade attacks against climate measures is a necessary interim step towards helping governments transition to clean energy on the rapid timeline that is required to head off the worse possible impacts of climate change."
"A moratorium on the use of international trade agreements to challenge climate policies would: (1) help governments safeguard existing climate mitigation and transition measures by protecting them from trade challenge; (2) create the space for governments to adopt the bolder climate policies that justice and science demand without fear or threat of new trade challenges; and (3) incentivize and offer countries time to work together and resolve the underlying tensions between current trade law and the imperative for climate action," he explained.
St. Louis also called for implementing a climate peace clause to "temporarily halt cases like this one so countries can prioritize the green transition and revise the WTO rules currently creating unnecessary hurdles."
"We must move forward with IRA implementation and work to enact even bolder policies to transform our economy for a clean energy future, and support other countries that do the same," she asserted.
China's WTO complaint comes on the heels of the hottest year in human history—which concluded with a United Nations climate summit that scientists called a "tragedy for the planet" because the conference's final agreement didn't demand a phaseout of fossil fuels that are driving global heating.
Soaring temperatures have continued this year, with European Union scientists recently announcing that last month was the warmest February on record. Carlo Buentempo, director of the E.U.'s Copernicus Climate Change Service, stressed that "the climate responds to the actual concentrations of greenhouse gases in the atmosphere so, unless we manage to stabilize those, we will inevitably face new global temperature records and their consequences."
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US Groups to Biden Trade Chief: Ensure Deals Don't Block Bold Climate Action
"Outdated trade rules continue being used to attack climate programs at the federal and sub-federal levels," said an organizer with the Trade Justice Education Fund, which is pushing for a "Climate Peace Clause."
Aug 08, 2023
Amid key talks in Seattle, Washington, 234 U.S. environmental organizations on Tuesday pressured the Biden administration to work on ensuring that international trade deals don't thwart efforts to combat the global climate emergency.
Echoing previous letters from state legislators and national groups—including 350.org, Food & Water Watch, Greenpeace USA, Sierra Club, and Trade Justice Education Fund—the coalition wrote to U.S. Trade Representative Katherine Tai demanding a "Climate Peace Clause" in trade deals.
"As state and local organizations working to protect our climate and environment, we call on you and the Biden administration to please take decisive action to prevent climate policies in our states from being attacked and undermined via outdated trade agreements," the letter to Tai states, noting the U.S. commitment to the Paris agreement's 1.5°C temperature goal.
"Please work with other countries to secure a 'Climate Peace Clause': a commitment to refrain from using dispute settlement mechanisms in international trade agreements to challenge climate mitigation and/or clean energy transition measures."
The new letter highlights how countries and the European Union have threatened provisions of the Inflation Reduction Act—a law signed by President Joe Biden last year that is intended to support the renewable energy transition and includes electric vehicle credits. It also points out that the U.S. and India have gone after each other's solar efforts.
"Cases like these not only directly threaten climate policies, but could dissuade state legislatures from passing and governors from signing future climate policies," the letter stresses. "While we greatly appreciate your recent announcement that India and the U.S. will be dropping trade attacks on each other's renewable energy programs within the World Trade Organization (WTO), we still need a broader and longer-term solution to the ongoing conflict between outdated trade rules and the imperative for ambitious climate action."
"Therefore, we urge you to take additional action to help bring trade attacks on climate action and a liveable future to an immediate end," the document adds. "Specifically, we join with state legislators from all 50 states in asking that you and the administration please work with other countries to secure a 'Climate Peace Clause': a commitment to refrain from using dispute settlement mechanisms in international trade agreements to challenge climate mitigation and/or clean energy transition measures."
The coalition is calling on Tai's office "to pursue a Climate Peace Clause within the texts of pending bilateral and regional trade agreements such as the Indo-Pacific Economic Framework, the U.S.-E.U. Trade & Technology Council and the Americas Partnership for Economic Prosperity, as well as within other venues," like the Group of Seven.
Signatories to the letter include Conservation Alabama, Dallas Peace and Justice Center, Greater Boston Trade Justice, Hawaii Wildlife Fund, Kentucky Environmental Foundation, Mazaska Talks, New Mexico Climate Justice, Save Our Illinois Land, Washington Fair Trade Coalition, and WE ACT for Environmental Justice as well as several chapters of 350.org, Climate Reality Project, Extinction Rebellion, Indivisible, Our Revolution, Physicians for Social Responsibility, and Sierra Club.
"Outdated trade rules continue being used to attack climate programs at the federal and sub-federal levels," Trade Justice Education Fund climate organizer Clayton Tucker said Tuesday. "A moratorium on the use of trade agreements to challenge climate mitigation and clean energy transition policies would enable local, state, and national governments to safeguard existing climate measures and adopt the additional policies urgently needed to prevent the worst outcomes from climate change."
"We were glad when the administration recently announced a reciprocal agreement ending India's trade attacks again U.S. states' solar programs and vice versa," Tucker added. "Unfortunately, other clean energy initiatives in the U.S. and elsewhere are still being threatened and future climate policies remain at serious risk. A Climate Peace Clause would provide assurances that other climate programs won't be delayed or weakened by trade attacks moving forward."
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'Heartbreaking' and 'Pathetic': US Obstructs Patent Waiver for Covid Tests and Treatments
"There have been at least 290,000 deaths from Covid-19 since the WTO punted on the question of global access to tests and treatments back in June," said one advocate. "How many more need to die before the U.S. joins the right side of history?"
Dec 06, 2022
Global health campaigners denounced U.S. President Joe Biden's administration for refusing to support a temporary suspension of patents for Covid-19 tests and treatments this year, a move that further delays the possibility of securing a World Trade Organization intellectual property waiver aimed at increasing access to lifesaving medical tools in developing nations.
In a statement released on Tuesday morning, U.S. Trade Representative Katherine Tai said that "over the past five months, USTR officials held robust and constructive consultations with Congress, government experts, a wide range of stakeholders, multilateral institutions, and WTO members."
Tai continued:
Real questions remain on a range of issues, and the additional time, coupled with information from the USITC [United States International Trade Commission], will help the world make a more informed decision on whether extending the ministerial decision to Covid-19 therapeutics and diagnostics would result in increased access to those products. Transparency is critical and USTR will continue to consult with Congress, stakeholders, and others as we continue working to end the pandemic and support the global economic recovery.
As Bloomberg reported, investigations of the sort that Tai wants the USITC to pursue "can take nine months to a year to complete," pushing the prospects for a comprehensive waiver of the WTO's Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) well into 2023 or beyond.
Dr. Mohga Kamal-Yanni, policy co-lead for the People's Vaccine Alliance, said in response that "it is heartbreaking to see the Biden administration succumb to pressure from pharmaceutical company lobbyists and their henchmen in Congress."
"This moment of weakness will cost countless lives in low- and middle-income countries, leading to continued economic devastation."
"This moment of weakness will cost countless lives in low- and middle-income countries, leading to continued economic devastation," said Kamal-Yanni, "while a handful of pharmaceutical CEOs and shareholders will get even richer."
"The U.S. has had more than two years to meaningfully engage in WTO negotiations over access to lifesaving tests and treatments," she added. "Kicking the issue further into the long grass, just as the negotiating deadline approaches, is pathetic."
This sentiment was echoed by Arthur Stamoulis, executive director of the Trade Justice Education Fund.
"There have been at least 290,000 deaths from Covid-19 since the WTO punted on the question of global access to tests and treatments back in June," said Stamoulis. "How many more need to die before the U.S. joins the right side of history?"
"We're in the third year of the pandemic and billions of people worldwide still don't have access to Covid tests, vaccines, and medicines," Stamoulis continued.
Large swaths of the Global South have been deprived of lifesaving Covid-19 medical tools and remain completely unprotected, with less than 25% of people in low-income countries having received at least one vaccine dose to date.
Experts have long argued that pausing enforcement of the corporate-friendly TRIPS Agreement for the duration of the pandemic would remove the intellectual property barriers standing in the way of increased generic manufacturing. However, in June, Big Pharma-aligned policymakers--most of them from highly vaccinated rich countries--defeated a popular proposal to waive coronavirus-related patents to boost the global supply of jabs, diagnostics, and therapeutics.
Instead, the WTO, which operates on the consensus of its 164 members, adopted a watered-down alternative pertaining only to vaccines--described by critics as worse than the status quo--and vowed to decide whether to extend the decision to cover tests and treatments within six months. The Biden White House's new demand for a delay--in which they joined the European Union, United Kingdom, Japan, South Korea, Singapore, and Switzerland--comes just days before the December 17 deadline.
As Knowledge Ecology International director James Love pointed out on social media, the U.S. government blocked the proposed TRIPS waiver for tests and treatments after telling the World Health Organization that it is opposed to including intellectual property flexibilities in an emerging WHO pandemic treaty "because that's a conversation for the WTO."
\u201cYesterday the US government told the WHO they don't want intellectual property rights discussed in the WHO pandemic treaty, because that's a conversation for the WTO. Also, same day, blocked WTO agreement on exceptions for COVID 19. \n\n https://t.co/ryTFnvgYAL\u201d— James Love (@James Love) 1670304180
Meanwhile, the need for improved access to tests and treatments is particularly acute in poor countries, given the ongoing severity of global vaccine apartheid.
The WHO estimates that just one in every 50 tests is administered in low- and middle-income nations home to 84% of the global population. While publicly available data on treatment access is sparse, a recent analysis from Oxfam and the People's Vaccine Alliance shows that just a quarter of Pfizer's Paxlovid pill orders are destined for developing countries.
Pfizer's licensing agreement with the United Nations-backed Medicines Patent Pool enables other drugmakers to produce its pill for generic consumption in just 95 countries representing 53% of the global population. As a result, excluded countries, many of which are not wealthy, may be forced to pay $250 per course rather than $25.
Globally, the ongoing Covid-19 pandemic has caused more than 15 million deaths directly and indirectly, and the disease alone continues to kill roughly 1,500 people per day.
The profoundly inequitable allocation of medicines--fueled by high-income nations snatching up a disproportionate share of vaccines, tests, and treatments and pharmaceutical corporations refusing to share knowledge and technology--has exacerbated avoidable suffering. Artificially imposed scarcity and uneven distribution also enables the coronavirus to continue circulating and mutating, increasing the likelihood of a vaccine-resistant variant emerging.
A recent investigation revealed the extent to which Big Pharma has lobbied against a robust intellectual property waiver for Covid-19 jabs, diagnostics, and therapeutics--and worsened deadly inequality in the process.
Tai's "call for 'more information' cannot be an excuse for inaction," Stamoulis said Tuesday. "While pharmaceutical monopolies make billions, people are still dying, others are getting long Covid, the economy is suffering, and new variants remain a constant threat."
"It's long past time," he added, "for the Biden administration to support the modest changes to WTO pharmaceutical monopoly protections standing in the way of Covid test and treatment access around the world."
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