Entrance to the WTO building in Geneva, Switzerland
Image: Benoît Prieur, Wikimedia Commons, CC0 1.0
The World Trade Organization (WTO) has ruled that U.S. investment tax credits (ITCs) and production tax credits (PTCs) for domestic clean energy production under the Inflation Reduction Act (IRA) violate multiple articles of the General Agreement on Tariffs and Trade 1994 (GATT 1994), a WTO framework designed to promote fair trade by reducing tariffs and other barriers.
The ruling found that by attaching bonus subsidies to US-made goods, the United States treated Chinese products less favorably than domestic products in terms of sales, distribution and use.
The WTO document notes that China withdrew its claims against one of the two controversial measures – the Clean Vehicle Credit – after the US ended the program in July 2025 through the One Big Beautiful Bill Act (OBBBA). The ruling applies specifically to the ITC and PTC Domestic Content Bonus Credits.
China had asked the WTO in March 2024 to investigate the legality of the ITCs and PTCs.
The case comes amid a broader crisis at the WTO, where the main dispute settlement authority, the Appellate Body, has been paralyzed since 2019 due to US blockades on the appointment of judges under both the Trump and Biden administrations. Now that the remaining judges’ terms have expired and no replacements have been approved, the system cannot hear appeals, effectively undermining the enforcement of WTO rulings.
“The panel’s decisions can be appealed, but appeals are made in the void,” energy and environmental law expert Anatole Boute recently said. pv magazine. “This paralyzes the dispute resolution process because without appeal, disputes cannot be fully resolved and decisions cannot be enforced.”
Despite the continued paralysis of the WTO, China filed a case against India with the international organization in December over the country’s subsidies for its photovoltaic sector. The Chinese government claims the measures violate several WTO obligations, including binding tariffs and national treatment, and constitute import substitution subsidies.
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