TWN Info Service on WTO and Trade Issues (Jul26/23)
30 July 2026
Third World Network

WTO: China wins dispute over Turkiye's duties on EVs, hybrid vehicles
Published in SUNS #10493 dated 30 July 2026

Geneva, 29 Jul (D. Ravi Kanth) -- A dispute panel at the World Trade Organization on 28 July seemingly ruled that Turkiye's imposition of additional duties on electric vehicles (EVs) and some hybrid vehicles from China as well as its import permit licensing scheme are inconsistent with the GATT 1994, said people familiar with the development.

In a trade dispute (DS629) raised by China - "Turkiye - Measures Concerning Electric Vehicles and Other Types of Vehicles from China", the Panel apparently found that Turkiye's imposition of additional duties on EVs and some hybrid vehicles from China exceed the tariff bindings in Turkiye's schedule of concessions, and are thus inconsistent with Article II of the GATT 1994.

The Panel rejected Turkiye's defence that the additional duties are justified under Articles XX(b) and (g), referring to exceptions necessary to protect human, animal or plant life or health or relating to the conservation of exhaustible natural resources.

According to Turkiye, the measures are necessary to reduce CO2 emissions by protecting domestic EV manufacturers.

Turkiye, according to the panel report, argued that these manufacturers play a key role in developing charging infrastructure which is critical for the uptake of EVs in the Turkish market.

The Panel found that Turkiye did not demonstrate that the importation of EVs and hybrid vehicles creates a risk of increase or non-reduction of CO2 emissions.

The Panel also found Ankara's additional duties to be inconsistent with the Most-Favoured-Nation (MFN) principle in Article I:1, because Turkiye's regional trade agreement (RTA) partners are exempted from the duties.

The Panel, however, broadly accepted Turkiye's defence that this discrimination is justified under Article XXIV.

Apparently, this is the first dispute in which a panel accepts that the existence of RTAs justifies exempting RTA partners from (otherwise WTO-consistent) additional duties, and discusses the conditions allowing for such a departure from the MFN principle.

The panel argued that Turkiye's import permit licensing scheme (IPLS) conditions the importation of EVs and externally rechargeable hybrid vehicles from countries other than Turkiye's RTA partners upon satisfying several after-sales service requirements.

CONTEXT

The dispute raised by China concerns various measures imposed by Turkiye on imports of electric vehicles and certain other types of vehicles originating in China.

Additional duties: Turkiye applies additional duties on EVs, hybrid vehicles, and internal combustion vehicles. At the time of panel establishment, these duties only applied to vehicles from China. During the proceedings, the measure was amended and the duties currently apply to vehicles from all countries that do not have a regional trade agreement (RTA), i.e. a free trade agreement (FTA) or a customs union, with Turkiye. Thus, vehicles from China are subject to the additional duties, while vehicles from the European Union (Turkiye's main trading partner) are not.

Import Permit Licensing Scheme (IPLS): Turkiye conditions the importation of EVs and externally rechargeable hybrid vehicles from countries other than Turkiye's RTA partners upon satisfying five after-sales service requirements simultaneously: (i) the importer must own a certain number of service stations; (ii) persons responsible for the maintenance and repair of vehicles in these service stations must have a specific certificate of competence; (iii) a call centre with minimum personnel must be established in Turkiye; (iv) the manufacturer must have an authorized representative in Turkiye; and (v) the importer must provide a written commitment that it accepts certain procedures regarding the monitoring, control and supervision of battery systems.

China requested consultations with Turkiye on 8 October 2024 to address its concerns. These consultations were held on 20-21 November 2024, but did not resolve the dispute.

Therefore, China, on 27 January 2025, requested the WTO's Dispute Settlement Body (DSB) to establish a dispute panel to examine its claims, which the DSB subsequently established on 24 February 2025. The Panel was composed on 22 April 2025.

KEY FINDINGS

Additional duties: The Panel decided to only review the current version of the duties, which do not single out vehicles from China but apply to vehicles imported from all countries that do not have an RTA with Turkiye.

Regarding China's Article II claim that the additional duties exceed tariff bindings in Turkiye's schedule, the Panel found that certain, but not all, of the additional duties exceed tariff bindings in Turkiye's schedule, and are therefore inconsistent with Article II:1(b) of the GATT 1994.

More specifically:

* EVs: the duties exceed tariff bindings in Turkiye's schedule and, therefore, violate Article II:1(b);

* Hybrid vehicles:

-- for certain hybrid vehicles that would have been classified under a list of 34 tariff lines prior to the introduction of HS 2017 (which introduced new subheadings for hybrid vehicles): the duties exceed tariff bindings in Turkiye's schedule and, therefore, violate Article II:1(b);

-- for other hybrid vehicles (including most passenger cars): the duties do not violate the GATT 1994;

* Internal combustion engine vehicles: China had not presented sufficient arguments and evidence to demonstrate that Turkiye has bound its tariffs for these vehicles (which it did not seem to have done).

The Panel rejected arguments by Turkiye that: (i) its Uruguay Round tariff commitments on EVs should not cover currently commercially available EVs because the technological and commercial development leading to their mass production could not have been reasonably anticipated; and (ii) that the question whether Turkiye has bound its tariffs on EVs and hybrid vehicles should be left to the HS transposition process and the Panel should refrain from ruling on it.

Regarding Turkiye's Article XX defence that the additional duties are necessary to achieve Turkiye's CO2 emissions reduction objectives by developing domestic EV manufacturing capacity, the Panel rejected Turkiye's defence that the additional duties are justified under Articles XX(b) and (g).

Turkiye argued that the additional duties serve the objective of reducing CO2 emissions through a causal chain linking the protection of domestic EV manufacturers to the availability of charging infrastructure in the market which Turkiye submitted is key for consumer uptake of EVs. Turkiye also referred to risks related to import- dependence.

The Panel found that Turkiye had not substantiated its factual assertions, and therefore not demonstrated that the importation of EVs and hybrid vehicles creates a risk of increase or non-reduction of CO2 emissions.

Regarding China's Article I claim that the exemption of Turkiye's RTA partners violates the MFN principle, the Panel found that the additional duties are also inconsistent with the MFN principle in Article I:1 of the GATT 1994, because they do not apply to vehicles from Turkiye's RTA partners.

Regarding Turkiye's Article XXIV defence that the exemption is justified by the existence of RTAs, the Panel accepted, in general, Turkiye's defence that the violation of the MFN principle is justified under Article XXIV of the GATT 1994.

The Panel considered it enough that Turkiye had argued that the RTAs satisfy the requirements of Article XXIV, in particular that they liberalise "substantially all the trade" between their parties, and that China had not indicated that it disagrees with this.

Furthermore, the Panel agreed with Turkiye that preferential tariff treatment is in the nature of RTAs, and therefore found that Turkiye had made an initial demonstration that the RTAs required the exemption.

The Panel rejected the defence with respect to one specific RTA, the Turkiye-Venezuela FTA, because this FTA excludes several vehicle headings from the scope of tariff liberalization.

Regarding China's Article III:4 claim that the IPLS violates the national treatment obligation, the Panel found that each of the requirements in the IPLS accorded to imported vehicles treatment less favourable than one accorded to the like domestic vehicles, inconsistent with Article III:4.

In addition, the Panel found that enforcing after-sales requirements for imported vehicles through an import permit scheme was less favourable compared to enforcing after-sales requirements for domestic vehicles through fines, and therefore also inconsistent with Article III:4.

Regarding Turkiye's Article XX(d) defence that the IPLS is necessary to secure compliance with Turkiye's laws on consumer protection and type-approval, the Panel rejected Turkiye's defence that the IPLS was necessary to secure compliance with Turkiye's laws on consumer protection and type-approval.

The Panel considered Turkiye's general argument that the IPLS is designed to secure such compliance by ensuring proper after-sales services.

The Panel found that Turkiye had not demonstrated how each of the requirements and the enforcement mechanism, when compared to the treatment accorded to domestic EVs and ERHVs, are necessary to secure compliance with the relevant laws. +