China widens trade battlefield with precedent-setting dispute over Canada’s EV tariffs
In a just-announced investigation into Canada’s ‘discriminatory’ tariffs on EV imports, China has cited new legal language as justification.
In its statement divulging the probe on Tuesday, the Ministry of Commerce (Mofcom) quoted Article 7 of China’s foreign trade law, which permits countermeasures against “any country or region” as a response to “prohibitive, restrictive or other measures” applied on a “discriminatory basis”.
The investigation, which the ministry said would lead to “necessary action”, was disclosed shortly after Canada said it would apply 100 per cent tariffs on Chinese-made EVs.
“This is a new use of a trade tool for China,” said Yao Weiqun, a professor in economics at the Shanghai University of International Business and Economics.
Though the article has been part of the law since 1994 – when the first version was entered into force – it has never been referenced as justification for a trade action.
“This means on top of the existing mechanism at the [World Trade Organization], China can also officially deal with Canada bilaterally, which opens more ways for this matter to be tackled,” Yao said.
China regards Canada’s EV tariffs as worse than the ones by the US and EU, because Canada did not conduct its own investigation beforehand