Abstract
The French Government recently reformed the "Ecological Bonus" scheme, which has generously supported its domestic consumers in purchasing electric vehicles ("EVs"), by introducing a new criterion based on the amount of carbon emitted in the vehicle's manufacturing. Starting in 2024, the scheme strictly sets the production carbon footprint ceiling at 14.75 tons of CO2, effectively denying the subsidy eligibility of more than one-third of EVs sold in France. Other European Union ("EU") Member States, including Italy, have considered taking similar policy actions. Criticized as the French version of the discriminatory United States Inflation Reduction Act, the new Ecological Bonus scheme also represents the world's first "green" EV subsidies based on carbon emissions, combining fiscal policy with regulatory standard-setting. This signals not only France's but also the EU's ambition to integrate electrification with reindustrialization amid intensified competition for leadership in the low-carbon sector. Given the EU's obligations under the multilateral trading system as administered by the World Trade Organization ("WTO"), it is essential to examine the WTO's consistency in the French green EV subsidies to avoid trade frictions, which has received scant attention so far. Therefore, this Article provides the first systematic legal and policy analysis of the interface between France's new green EV subsidies and the EU's WTO commitments. A WTO law scrutiny can reveal potential conflicts between Members' electrification and reindustrialization agenda with the multilateral trading system. This Article makes actionable recommendations for policymakers to align green subsidies with international trade rules to maximize the synergy between trade liberalization and low-carbon transition. It also cautions that the time for revisiting the WTO rules, particularly those governing the use of subsidies to ensure they are fit for global decarbonization, may have arrived.
Citation
Mandy Meng Fang,
When Electrification Meets Reindustrialization: The First EU Green Electric Vehicle Subsidies and the WTO Consistency,
35 Duke Journal of Comparative & International Law
77-128
(2025)
Available at: https://scholarship.law.duke.edu/djcil/vol35/iss1/2
