UNITED STATES – CERTAIN TAX CREDITS UNDER THE INFLATION REDUCTION ACT REQUEST FOR THE ESTABLISHMENT OF A PANEL BY CHINA
Document: REQUEST FOR THE ESTABLISHMENT OF A PANEL
Date: 16 July 2024
Document codes: WT/DS623/3
Complainant: China
Respondent: U.S.
Dispute stage: Panel
Agreements cited: Art. I:1, III:4  GATT 1994Art. 2.1, 2.2  Trade-Related Investment Measures (TRIMs)Art. 3.1(b), 3.2  Subsidies and Countervailing Measures (SCM)

UNITED STATES – CERTAIN TAX CREDITS UNDER THE INFLATION REDUCTION ACT
REQUEST FOR THE ESTABLISHMENT OF A PANEL BY CHINA
The following communication, dated 15 July 2024, from the delegation of China to the Chairperson
of the Dispute Settlement Body, is circulated pursuant to Article 6.2 of the DSU.

Settlement of Disputes ("DSU"), Article XXIII of the General Agreement on Tariffs and Trade 1994
("GATT 1994"), Article 8 of the Agreement on Trade -Related Investment Measures
("TRIMs Agreement"), and Articles 4 and 30 of the Agreement on Subsidies and Countervailing
Measures ("SCM Agreement"). Consultations were held on 7 May 2024 with a view to reaching a
mutually satisfactory solution. Unfortunately, these consultations failed to resolve the dispute.
3. Therefore, China submits this request pursuant to Articles 4.7 and 6 of the DSU, Article XXIII:2
of the GATT 1994, Article 8 of the TRIMs Agreement, and Articles 4 and 30 of the SCM Agreement.
4. Part I of this request for the establishment of a panel identifies the measures at issue. Part II
provides a brief summary of the legal basis for China's claims against those measures.
I. MEASURES AT ISSUE
5. On 16 August 2022, the Inflation Reduction Act, P.L. 117 -169, 136 Stat. 1818 ("IRA") was
signed into law. The IRA may be the largest single subsidy measure in modern economic history.
Official estimates of the climate -related subsidies provided under the IRA place their value at
$393 billion. Other independent studies have estimated that the value of these subsidies exceeds
$1 trillion.
6. While the subsidies provided under the IRA are massive and far -reaching in their economic
effects, this request for the establishment of a panel concerns only certain subsidies provided under
the IRA that are contingent, in one way or another, upon the use of domestic over imported goods
or that otherwise discriminate against goods of Chinese origin. These are: (1) the Clean Vehicle
Credit;1 (2) the Investment Tax Credit for Energy Property; 2 (3) the Clean Electricity Investment
Tax Credit; 3 (4) the Production Tax Credit for Electricity from Renewables; 4 and (5) the Clean

1 Section 13401 of the IRA, codified at 26 U.S.C. 30D. The subsidy programmes enumerated herein
sometimes go by different names. The names used in this request for the establishment of a panel are taken
from Building a Clean Energy Economy: A Guidebook to the Inflation Reduction Act's Investments in Clean
Energy and Climate Action (The White House, January 2023) (version 2), available at
http://www.cleanenergy.gov.
2 Section 13102 of the IRA, codified at 26 U.S.C. 48.
3 Section 13702 of the IRA, codified at 26 U.S.C. 48E.
4 Section 13101 of the IRA, codified at 26 U.S.C. 45.

Electricity Production Tax Credit.5 Part A addresses the Clean Vehicle Credit (subsidy (1)), while Part
B addresses subsidies (2) through (5) (hereinafter referred to collectively as the "Renewable Energy
Tax Credits").
7. China strongly supports national and international efforts to reduce and mitigate the effects
of climate change, including through the use of clean energy subsidies provided in accordance with
the WTO Agreement. International trade in clean energy products , including the inputs to those
products, can accelerate and reduce the costs of the clean energy transition when undertaken in
accordance with the WTO Agreement. Non -prohibited, non-discriminatory subsidies have a role to
play in this transition.
8. However, subsidies that violate the WTO Agreement, including subsidies that are contingent
upon the use of domestic over imported goods or that otherwise discriminate against imported
goods, remain prohibited and threaten to undermine international coopera tion on reducing and
mitigating the effects of climate change. The subsidies at issue in this request for the establishment
of a panel are of this type. They are discriminatory, protectionist, and contrary to WTO rules. They
do nothing to advance the shared interest that all Members have in addressing climate change and
are to be condemned.
A. The Clean Vehicle Credit
9. Section 13401 of the IRA establishes the Clean Vehicle Credit for qualifying electric vehicles
("EVs"). To qualify for the Clean Vehicle Credit, final assembly of the qualifying vehicle must take
place in North America.6 The North American assembly requirement is a condition for obtaining either
or both of the two components of the Clean Vehicle Credit: (1) the critical minerals component,
worth $3,750 per vehicle; and (2) the battery component, worth an additional $3,750 per vehicle.
10. To qualify for the $3,750 critical minerals component of the Clean Vehicle Credit, a percentage
of the value of applicable critical minerals contained in the vehicle battery must (i) be extracted or
processed in the United States; (ii) be extracted or proc essed in a country with which the United
States has a free trade agreement; or (iii) have been recycled in North America. Applicable
percentages increase from 40 percent prior to 2024 to 80 percent after 2026. 7 Qualifying critical
minerals include, inter alia, aluminium, cobalt, lithium, nickel, and graphite.
11. In addition, after calendar year 2024, a clean vehicle will not qualify for the critical minerals
component of the Clean Vehicle Credit if it contains any critical minerals that were "extracted,
processed, or recycled by a foreign entity of concern". 8 A "foreign entity of concern", or "FEOC", is
defined to include, inter alia, a foreign entity that is "owned by, controlled by, or subject to the
jurisdiction or direction of a government of a foreign country that is a covered nation…".9 A "covered
nation" includes the People's Republic of China.10

5 Section 13701 of the IRA, codified at 26 U.S.C. 45Y. The United States has previously notified the
subsidies identified in this request for the establishment of a panel. See United States, New and Full
Notification Pursuant to Article XVI:1 of the GATT 1994 and Article 25 of the Agreement on Subsidies and
Countervailing Measures (G/SCM/N/401/USA) (10 November 2023), parts 3.15 (renewable energy production
credit), 3.16 (energy investment credit), 3.25 (clean vehicle credit).
6 26 U.S.C. 30D(d)(1)(G). The U.S. Internal Revenue Service has defined "North America" for this
purpose as consisting of the 50 states of the United States, the District of Columbia, Puerto Rico, Canada, and
Mexico. See Internal Revenue Service, Fact Sheet: "IRS updates frequently asked questions related to new,
previously owned and qualified commercial clean vehicle credits" (March 2023), FS-2023-08, available at
https://www.irs.gov/pub/taxpros/fs-2023-08.pdf. "Final assembly" is defined under the IRA to mean:
the process by which a manufacturer produces a new clean vehicle at, or through the use of, a plant,
factory, or other place from which the vehicle is delivered to a dealer or importer with all component parts
necessary for the mechanical operation of the vehicle included with the vehicle, whether or not the component
parts are permanently installed in or on the vehicle.
26 U.S.C. 30D(d)(5).
7 26 U.S.C. 30D(e).
8 26 U.S.C. 30D(d)(7)(A).
9 Id., referring to 42 U.S.C. 18741(a)(5) for the definition of a "foreign entity of concern".
10 10 U.S.C. 2533c(d)(2), indirectly incorporated by reference into the IRA, defines the term "covered
nation" to mean the Democratic People's Republic of North Korea, the People's Republic of China, the Russian
Federation, and the Islamic Republic of Iran.

12. To qualify for the $3,750 battery component of the Clean Vehicle Credit, a certain percentage
of the value of the battery components in an EV must be manufactured or assembled in
North America. Applicable percentages increase from 50 percent prior to 2024 to 100 percent after
2028.11 In addition, after 31 December 2023, a vehicle does not qualify for the battery component
of the credit if any "components" contained in its battery are "manufactured or assembled by a
foreign entity of concern" as specified above.12
B. Renewable Energy Tax Credits
13. The IRA extends and modifies certain pre -existing investment tax credits ("ITCs") and
production tax credits ("PTCs") for renewable energy projects. The ITCs provide tax subsidies for
investments in eligible renewable energy projects while the PTCs provide tax subsidies for power
generated from eligible renewable energy sources. The modified ITC and PTC tax credits include
bonus subsidy elements that are contingent upon the use of domestic over imported goods.
14. The IRA has two related investment tax credits for renewable energy projects. The first, the
Investment Tax Credit for Energy Property, is codified at 26 U.S.C. 48 and is available for eligible
renewable energy projects for which construction begins prior to 1 January 2025. The second
investment tax credit available under the IRA, the Clean Electricity Investment Tax Credit, is codified
at 26 U.S.C. 48E and is available for eligible renewable energy projects placed in service after 31
December 2024. The bas e tax credit under both programmes is six percent of the qualified
investment in the energy property.
15. The IRA also has two related production tax credits for energy produced from eligible
renewable energy sources. The first, the Production Tax Credit for Electricity from Renewables, is
codified at 26 U.S.C. 45 and is available over a 10 -year period for ene rgy produced from projects
that begin construction prior to 1 January 2025. The second, the Clean Electricity Production Tax
Credit, is codified at 26 U.S.C. 45Y and is available over a 10-year period for energy produced from
projects placed in service after 31 December 2024. The base credit available under both programmes
is $0.03/kW, inflation adjusted.
16. The two ITC programmes and the two PTC programmes contain bonus subsidy elements that
are contingent upon the use of domestic over imported goods. For the ITC programmes, the amount
of the tax credit is increased by 10 percentage points if the domestic con tent requirements are
satisfied.13 For the PTC programmes, the amount of the tax credit is increased by 10 percent if the
domestic content requirements are satisfied.14
17. The domestic content requirements for the four Renewable Energy Tax Credits are the same.
Specifically, the eligible project must use 100 percent domestic steel and iron for construction
materials (the "Steel and Iron Requirement"). In addition, a certain percentage of the components
incorporated into an eligible project must be produced in the United States (the "Manufactured
Products Requirement"). The percentage of incorporated components that must be produced in the
United States varies over time and also in relation to the type of renewable energy project.
C. Summary of Measures at Issue
18. Taking into account the foregoing, the measures at issue include, inter alia:
a. The Inflation Reduction Act, P.L. 117-169, 136 Stat. 1818;
b. Internal Revenue Service, Section 30D New Clean Vehicle Credit, Proposed Rule, 88 FR
23370 (17 April 2023);
c. Internal Revenue Service, Section 30D Excluded Entities, Proposed Rule, 88 FR 84098
(4 December 2023);

11 26 U.S.C. 30D(e)(2).
12 26 U.S.C. 30D(d)(7)(B).
13 26 U.S.C. 48(a)(12); 26 U.S.C. 48E(a)(3)(B). The domestic content bonus is reduced to two percent
if certain other conditions relating to wage and apprenticeship requirements are not satisfied.
14 26 U.S.C. 45(b)(9); 26 U.S.C. 45Y(g)(11).

d. Internal Revenue Service, Clean Vehicle Credits Under Sections 25E and 30D; Transfer
of Credits; Critical Minerals and Battery Components; Foreign Entities of Concern, Final
Regulations, 89 FR 37706 (6 May 2024);
e. Department of Energy, Interpretation of Foreign Entity of Concern, Proposed Rule, 88 FR
84082 (4 December 2023);
f. Department of Energy, Interpretation of Foreign Entity of Concern, Final Rule, 89 FR
37079 (6 May 2024);
g. Internal Revenue Service, Definition of Energy Property and Rules Applicable to the
Energy Credit, 88 FR 82188 (22 November 2023);
h. Internal Revenue Service, Section 45Y Clean Energy Production Credit and Section 48E
Clean Electricity Investment Credit, Proposed Rule, 89 FR 47792 (3 June 2024);
i. Internal Revenue Service, Domestic Content Bonus Credit Guidance under Sections 45,
45Y, 48, and 48E (12 May 2023) (Notice 2023-38);
j. Internal Revenue Service, Domestic Content Bonus Credit Amounts under the Inflation
Reduction Act of 2022: Expansion of Applicable Projects for Safe Harbor in Notice 2023-38
and New Elective Safe Harbor to Determine Cost Percentages for Adjusted Percentage
Rule (16 May 2024) (Notice 2024-41).
19. The measures at issue include any amendments, supplements, or extensions to the measures
specified above, as well as any replacement or implementing measures. Without prejudice to the
generality of the foregoing, the measures at issue include any proposed regulations, final
regulations, frequently asked questions, or other forms of administrative interpretation or guidance
relating to the Clean Vehicle Credit or the Renewable Energy Tax Credits.
II. LEGAL BASIS OF THE COMPLAINT
20. The U.S. measures listed in Section I of this request for the establishment of a panel are
inconsistent with the United States' obligations under multiple provisions of the covered agreements.
21. China considers that the Clean Vehicle Credit is inconsistent with the following provisions of
the covered agreements:
a. Article I:1 of the GATT 1994, because by conditioning eligibility for the Clean Vehicle
Credit on the North American assembly requirement, the critical minerals requirement,
and the battery requirement (whether these three requirements are viewed separatel y
or in any combination), and also by restricting eligibility for the Clean Vehicle Credit in
the case of vehicles incorporating critical minerals and battery components produced by
so-called "foreign entities of concern", the United States does not accord to products of
Chinese origin immediately and unconditionally the same advantages, favours, privileges,
or immunities in respect of matters referred to in paragraph III:4 of the GATT 1994 that
the United States accords to like products originating in the territory of other countries.
b. Article III:4 of the GATT 1994, because by conditioning eligibility for the Clean Vehicle
Credit on the North American assembly requirement, the critical minerals requirement,
and the battery requirement (whether these three requirements are viewed separat ely
or in any combination), and also by restricting eligibility for the Clean Vehicle Credit in
the case of vehicles incorporating critical minerals and battery components produced by
so-called "foreign entities of concern", the United States does not acco rd to products of
Chinese origin treatment no less favourable than the treatment accorded to like products
of national origin in respect of laws, regulations, and requirements affecting the internal
sale, offering for sale, purchase, transportation, distri bution or use of the affected
products.

c. Article 2.1 of the TRIMs Agreement, because the measures at issue appear to be
investment measures related to trade in goods that are inconsistent with Article III:4 of
the GATT 1994.
d. Article 2.2 of the TRIMs Agreement, because the measures at issue appear to be
investment measures related to trade in goods, compliance with which is necessary to
obtain an advantage, and which require the purchase or use by an enterprise of products
of U.S. origin or from any U.S. source, as provided for in paragraph 1(a) of the Annex to
the TRIMs Agreement.
e. Articles 3.1(b) and 3.2 of the SCM Agreement, because the Clean Vehicle Credit is a
subsidy contingent, whether solely or as one of several other conditions, upon the use of
domestic over imported goods.
22. China considers that the Renewable Energy Tax Credits are inconsistent with the following
provisions of the covered agreements:
a. Article III:4 of the GATT 1994, because by conditioning eligibility for bonus subsidy
amounts on the use of U.S.-origin goods, the United States does not accord to products
of Chinese origin treatment no less favourable than the treatment accorded to like
products of national origin in respect of laws, regulations, and requirements affecting the
internal sale, offering for sale, purchase, transportation, distribution or use of the affected
products.
b. Article 2.1 of the TRIMs Agreement, because the measures at issue appear to be
investment measures related to trade in goods that are inconsistent with Article III:4 of
the GATT 1994.
c. Article 2.2 of the TRIMs Agreement, because the measures at issue appear to be
investment measures related to trade in goods, compliance with which is necessary to
obtain an advantage, and which require the purchase or use by an enterprise of products
of U.S. origin or from any U.S. source, as provided for in paragraph 1(a) of the Annex to
the TRIMs Agreement.
d. Articles 3.1(b) and 3.2 of the SCM Agreement, because the bonus subsidy amounts
available for the Renewable Energy Tax Credits are subsidies contingent, whether solely
or as one of several other conditions, upon the use of domestic over imported goods.
23. In addition, and as a consequence of the foregoing, the measures at issue appear to nullify or
impair benefits accruing to China, directly or indirectly, under the cited agreements.

24. China asks that this request for the establishment of a panel be placed on the agenda for the
next meeting of the DSB, which is scheduled for 26 July 2024, and that the DSB establish a panel
with standard terms of reference as set out in Article 7.1 of the DSU.