Winds Are Changing: The Rise of Threat-Based Trade Remedies Despite Climate Objectives - The EU Anti-subsidy Case on Electric Vehicles

Foreign imports that are dumped or subsidized are considered ‘unfair’ when they cause injury to the domestic producers. Under the World Trade Organization specific rules, members are fully entitled to take unilateral action in the form of anti-dumping (AD) or anti-subsidy (AS) measures, which may result in additional import duties on targeted imports. The threat of injury determination enables earlier intervention to protect the domestic industry. This article begins by examining historical trends, noting that the growing use of threat-based injury determinations reflects a policy shift toward a more anticipatory approach. The AS case on Chinese electric vehicles (EVs) is a high-profile example of increasing reliance on the ‘threat of injury’ standard, which emphasizes the complexities of the ex-ante analysis. Our analysis focuses on the European Commission’s (EC’s) main findings, both procedural (initiation, granting of anonymity, use of post-investigation period data, sampling, use of facts available) and substantive (subsidy calculation, lesser duty rule (LDR), threat of injury, Union interest). Prior European case-law reminds us that whilst the EC traditionally benefits from a broad discretion in complex economic matters, further reinforced by the 2018 trade defence reform, it remains bound by substantive and procedural requirements. Investigations in strategic industrial sectors increasingly raise environmental considerations that the current AS framework is ill-equipped to address. A more evolutionary application of the Union interest test could better balance environmental objectives with subsidization concerns – an approach which, if mirrored by other major economies through the recognition of legitimate climate-oriented public support, could ease geopolitical tensions.