Review of the WTO Compliance of Subsidy Measures in the U.S. and EU Chip Acts and China’s Countermeasure Strategies

Main Article Content

Siyu Liu

Keywords

U.S. and EU Chip Acts, WTO compliance, SCM Agreement, non-discrimination principle, subsidy measures, China’s countermeasure strategies

Abstract

Since 2022, the United States has enacted the CHIPS and Science Act, and the European Union has adopted the European Chips Act. Both have implemented massive fiscal subsidies, tax incentives, and other support measures to expand domestic semiconductor manufacturing capacity, while also incorporating so-called “guardrail clauses” that restrict investment in China. Taking WTO rules as the analytical framework, this paper systematically examines the WTO compliance of these measures based on the Agreement on Subsidies and Countervailing Measures (SCM Agreement) and the non-discrimination principles under GATT 1994. On this basis, the paper proposes that China should establish a multi-dimensional response system to address the impact of unilateralism on the global semiconductor industry chain and the multilateral trading system.

Abstract 12 | PDF Downloads 3

References

  • [1] CHIPS and Science Act of 2022, Pub. L. No. 117-167, 136 Stat. 1366 (effective Aug. 9, 2022).
  • [2] One Big Beautiful Bill Act, H.R. 1, 119th Cong. (2025).
  • [3] Regulation (EU) 2023/1781 of the European Parliament and of the Council of 13 September 2023 establishing a framework of measures for strengthening Europe’s semiconductor ecosystem (Chips Act), 2023 O.J. (L 229) 1.
  • [4] Chip Equipment Quality, Usefulness, and Integrity Protection Act, H.R. 6207, 119th Cong. (2025).
  • [5] Agreement on Subsidies and Countervailing Measures art. 1, Apr. 15, 1994, Marrakesh Agreement Establishing the World Trade Organization, Annex 1A, 1869 U.N.T.S. 14 (entered into force Jan. 1, 1995).
  • [6] Agreement on Subsidies and Countervailing Measures art. 2, Apr. 15, 1994, Marrakesh Agreement Establishing the World Trade Organization, Annex 1A, 1869 U.N.T.S. 14 (entered into force Jan. 1, 1995).
  • [7] Agreement on Subsidies and Countervailing Measures art. 2.1, Apr. 15, 1994, Marrakesh Agreement Establishing the World Trade Organization, Annex 1A, 1869 U.N.T.S. 14 (entered into force Jan. 1, 1995).
  • [8] Agreement on Subsidies and Countervailing Measures art. 2.2, Apr. 15, 1994, Marrakesh Agreement Establishing the World Trade Organization, Annex 1A, 1869 U.N.T.S. 14 (entered into force Jan. 1, 1995).
  • [9] Agreement on Subsidies and Countervailing Measures art. 3, Apr. 15, 1994, Marrakesh Agreement Establishing the World Trade Organization, Annex 1A, 1869 U.N.T.S. 14 (entered into force Jan. 1, 1995).
  • [10] Agreement on Subsidies and Countervailing Measures art. 5, Apr. 15, 1994, Marrakesh Agreement Establishing the World Trade Organization, Annex 1A, 1869 U.N.T.S. 14 (entered into force Jan. 1, 1995).
  • [11] Agreement on Subsidies and Countervailing Measures arts. 5-7, Apr. 15, 1994, Marrakesh Agreement Establishing the World Trade Organization, Annex 1A, 1869 U.N.T.S. 14 (entered into force Jan. 1, 1995).
  • [12] General Agreement on Tariffs and Trade art. 1, Apr. 15, 1994, Marrakesh Agreement Establishing the World Trade Organization, Annex 1A, 1867 U.N.T.S. 187 (entered into force Jan. 1, 1995).
  • [13] General Agreement on Tariffs and Trade art. 3, Apr. 15, 1994, Marrakesh Agreement Establishing the World Trade Organization, Annex 1A, 1867 U.N.T.S. 187 (entered into force Jan. 1, 1995).
  • [14] General Agreement on Tariffs and Trade art. 21, Apr. 15, 1994, Marrakesh Agreement Establishing the World Trade Organization, Annex 1A, 1867 U.N.T.S. 187 (entered into force Jan. 1, 1995).
  • [15] Agreement on Subsidies and Countervailing Measures arts. 1-2, Apr. 15, 1994, Marrakesh Agreement Establishing the World Trade Organization, Annex 1A, 1869 U.N.T.S. 14 (entered into force Jan. 1, 1995).
  • [16] Agreement on Subsidies and Countervailing Measures art. 1.1(a), Apr. 15, 1994, Marrakesh Agreement Establishing the World Trade Organization, Annex 1A, 1869 U.N.T.S. 14 (entered into force Jan. 1, 1995).
  • [17] Agreement on Subsidies and Countervailing Measures art. 1.1(b), Apr. 15, 1994, Marrakesh Agreement Establishing the World Trade Organization, Annex 1A, 1869 U.N.T.S. 14 (entered into force Jan. 1, 1995).
  • [18] Agreement on Subsidies and Countervailing Measures art. 2, Apr. 15, 1994, Marrakesh Agreement Establishing the World Trade Organization, Annex 1A, 1869 U.N.T.S. 14 (entered into force Jan. 1, 1995).
  • [19] Agreement on Subsidies and Countervailing Measures art. 2.1(c), Apr. 15, 1994, Marrakesh Agreement Establishing the World Trade Organization, Annex 1A, 1869 U.N.T.S. 14 (entered into force Jan. 1, 1995).
  • [20] Agreement on Subsidies and Countervailing Measures art. 6.3(b), Apr. 15, 1994, Marrakesh Agreement Establishing the World Trade Organization, Annex 1A, 1869 U.N.T.S. 14 (entered into force Jan. 1, 1995).
  • [21] Agreement on Subsidies and Countervailing Measures art. 6.3(a), Apr. 15, 1994, Marrakesh Agreement Establishing the World Trade Organization, Annex 1A, 1869 U.N.T.S. 14 (entered into force Jan. 1, 1995).
  • [22] International Talent Exchange Legal Service Platform. (2025, January 2). Commentary on the U.S. CHIPS Act. Retrieved March 15, 2026, from https://fyjjxy.zuel.edu.cn/hlscite/2025/0102/c15615a383321/page.htm
  • [23] Regulation (EU) 2023/1781 of the European Parliament and of the Council of 13 September 2023 establishing a framework of measures for strengthening Europe's semiconductor ecosystem (Chips Act), 2023 O.J. (L 229) 1.
  • [24] General Agreement on Tariffs and Trade art. 21, Apr. 15, 1994, Marrakesh Agreement Establishing the World Trade Organization, Annex 1A, 1867 U.N.T.S. 187 (entered into force Jan. 1, 1995).
  • [25] Panel Report, Russia – Measures Concerning Traffic in Transit, WT/DS512/R (adopted Apr. 26, 2019).
  • [26] Zhang, Q. W., & Wang, Z. X. (2020). Who determines the national security exception? Intelligence Magazine, 39(8), 40–45, 70.
  • [27] Panel Report, Russia – Measures Concerning Traffic in Transit, WT/DS512/R (adopted Apr. 26, 2019).
  • [28] Panel Report, Saudi Arabia – Measures Concerning the Protection of Intellectual Property Rights, WT/DS567/R (circulated June 16, 2020).
  • [29] Vienna Convention on the Law of Treaties art. 26, May 23, 1969, 1155 U.N.T.S. 331 (entered into force Jan. 27, 1980).
  • [30] Future Think Tank. (2025, June 18). 2025 China semiconductor industry analysis: Market size to exceed $718.9 billion, chip design talent gap reaches 230,000. Retrieved March 15, 2026, from https://www.vzkoo.com/read/202506181786765794bbbf6effba86b5
  • [31] CHIPS and Science Act of 2022, Pub. L. No. 117-167, 136 Stat. 1366 (effective Aug. 9, 2022).
  • [32] European Commission. (2023, September 21). Digital sovereignty: European Chips Act enters into force today [Press release]. Retrieved March 15, 2026, from https://ec.europa.eu/commission/presscorner/detail/en/ip_23_4518
  • [33] Panel Report, Saudi Arabia – Measures Concerning the Protection of Intellectual Property Rights, WT/DS567/R (circulated June 16, 2020).
  • [34] Understanding on Rules and Procedures Governing the Settlement of Disputes art. 3, Apr. 15, 1994, Marrakesh Agreement Establishing the World Trade Organization, Annex 2, 1869 U.N.T.S. 401 (entered into force Jan. 1, 1995).
  • [35] Understanding on Rules and Procedures Governing the Settlement of Disputes art. 22, Apr. 15, 1994, Marrakesh Agreement Establishing the World Trade Organization, Annex 2, 1869 U.N.T.S. 401 (entered into force Jan. 1, 1995).
  • [36] Regulations of the People’s Republic of China on Countervailing Measures (State Council Order No. 329, promulgated Nov. 26, 2001, revised Mar. 31, 2004).
  • [37] Understanding on Rules and Procedures Governing the Settlement of Disputes art. 11, Apr. 15, 1994, Marrakesh Agreement Establishing the World Trade Organization, Annex 2, 1869 U.N.T.S. 401 (entered into force Jan. 1, 1995).
  • [38] Anti-Unfair Competition Law of the People’s Republic of China (promulgated by the Standing Committee of the National People’s Congress, Sept. 2, 1993, revised June 27, 2025).
  • [39] Anti-Monopoly Law of the People’s Republic of China (promulgated by the Standing Committee of the National People’s Congress, Aug. 30, 2007, amended June 24, 2022).