In October 2024, China initiated a trade dispute with Turkey at the World Trade Organization (WTO), marking the latest development in rising tensions over international electric vehicle (EV) trade. This dispute centers around Turkey’s decision to impose significant import tariffs on electric vehicles from China, sparking concerns over protectionism and non-compliance with WTO rules.

Background: Turkey’s Tariffs on Chinese EVs

Turkey introduced a 40% import tariff on electric vehicles originating from China, along with additional regulatory measures aimed at restricting the import of such vehicles into the country. This tariff is notably higher than the agreed-upon rates under Turkey’s WTO obligations. The new tariffs came into effect earlier in 2024 and were justified by Turkish authorities as necessary to protect the country’s burgeoning domestic EV industry, particularly against China’s increasing dominance in the global EV market. These measures also included additional requirements, such as mandating importers of Chinese vehicles to maintain extensive service and support infrastructure within Turkey, as well as obtaining specific import licenses (Hurriyet Daily News, 2024).

China’s Response: WTO Complaint

China responded by filing a formal complaint with the WTO on October 9, 2024, challenging Turkey’s measures. The Chinese Ministry of Commerce labeled Turkey’s actions as discriminatory and in violation of WTO rules, accusing Turkey of unfairly targeting Chinese products and engaging in protectionist behavior. Specifically, China argued that Türkiye’s tariffs breached key principles of the General Agreement on Tariffs and Trade (GATT), particularly the Most-Favored Nation (MFN) treatment, which requires WTO members to treat imports from all countries equally unless otherwise agreed upon in trade agreements (MarketScreener, 2024).

According to China’s complaint, the 40% tariff imposed by Turkey was not only excessive but also discriminatory, as Turkey had exempted electric vehicles from the European Union (EU) and countries with which it had free trade agreements (FTAs) from these additional duties. Furthermore, Turkey’s new requirements for service infrastructure and local legal representation were viewed as additional barriers to entry for Chinese automakers (Export Compliance Daily, 2024).

Key Legal Issues in the Dispute

China’s filing highlights several legal issues within the WTO framework. First, China claims that Turkey’s tariffs violate the most-favored-nation principle under GATT, as Turkish regulations seemingly favor EU and FTA partners over China. Second, China argues that the import permit system, combined with the higher tariffs, constitutes a violation of GATT’s provisions on trade-related investment measures (TRIMs). China’s position is that these measures unfairly hinder Chinese companies from competing in the Turkish market on equal terms with their European counterparts.

China’s complaint also calls into question Turkey’s licensing procedures, which require Chinese manufacturers to establish significant local infrastructure in Turkey as a condition for importing their vehicles. This, China asserts, constitutes an additional barrier that is neither impartial nor uniformly applied, further violating WTO rules (P.A. Turkey, 2024).

Economic and Strategic Implications

This dispute comes at a time when both countries are seeking to bolster their automotive industries. Turkey has been heavily promoting its domestic electric vehicle production, particularly with the launch of its national EV brand, TOGG, which symbolizes the country’s aspirations to become a regional leader in green technology. Imposing tariffs on foreign EVs, particularly from China, can be seen as part of this broader strategy to protect and nurture the local industry while reducing the trade deficit.

China, on the other hand, has been expanding its EV market globally, with companies like BYD and NIO increasingly exporting vehicles to Europe, the Middle East, and other regions. China’s EV sector has benefited from substantial state support, leading to competitive pricing in international markets. However, this has raised concerns of unfair competition in countries like Turkey, where domestic industries struggle to compete against China’s lower-cost alternatives (Hurriyet Daily News, 2024).

Beyond the economic implications, the dispute also carries broader geopolitical significance. China and Turkey have historically maintained cordial trade relations, but this issue underscores the rising trade tensions as both nations seek to protect their domestic industries. Turkey’s tariffs can be seen as part of a broader global trend of countries reassessing their economic relations with China, particularly in industries where China holds a significant competitive edge, such as EVs.

WTO Dispute Resolution Process

The initiation of the WTO dispute resolution process begins with a 60-day consultation period, during which the two parties are expected to engage in negotiations to resolve the matter amicably. If no agreement is reached within this period, China can request the formation of a dispute panel to adjudicate the issue. This process can be lengthy and complex, often involving detailed legal arguments and economic analyses from both sides.

In similar disputes, WTO panels have often focused on whether the measures in question constitute unjustifiable protectionism or legitimate efforts to safeguard domestic industries. Given the global importance of the EV sector and the increasing prevalence of trade barriers targeting Chinese exports, the outcome of this case could have significant ramifications not only for Turkey and China but also for international trade policies in the EV industry (P.A. Turkey, 2024).

Conclusion

The trade dispute between Turkey and China over electric vehicle tariffs represents a significant moment in the evolving dynamics of global trade in green technology. As countries like Turkey seek to protect their nascent EV industries, the risk of trade conflicts with major exporters like China is likely to grow. The outcome of the WTO case will set an important precedent for how trade rules are applied in the context of environmentally sustainable industries and could influence future trade relations between countries with competing interests in the EV sector.

This case also underscores the challenges faced by developing economies in balancing domestic industrial policy with international trade obligations, a balance that will become increasingly difficult as countries transition toward greener economies.