European Union members voted on Friday to impose punitive tariffs on Chinese-made electric vehicles in a hotly anticipated move that is expected to draw a reaction from Beijing.
Tariffs will be imposed by October 31 after a closed-door vote of the bloc’s 27 member states. This came after an anti-subsidy investigation that found Chinese-made EVs were distorting the European market.
The European Commission said in a statement that it had “obtained the necessary support from EU member states for the adoption of tariffs”.
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It marks a victory for European Commission chief Ursula von der Leyen who, backed by France, had pushed for a crackdown on what she has described as a “flood” of cut-price, subsidised EVs from China into the EU market.
It will be a bitter pill to swallow for Beijing. It had – along with Germany – lobbied fiercely against the tariffs, which it has challenged at the World Trade Organization. China has also launched a series of retaliatory trade investigations.
The duties range from 7.8 per cent for Tesla to a top rate of 35.3 per cent for state-owned SAIC Motor and other companies deemed to have not cooperated with the EU’s anti-subsidy probe.
BYD’s electric vehicles will carry an extra duty of 17 per cent, compared to 18.8 per cent for Geely. Each of these comes on top of a base rate of 10 per cent for all EVs imported into the EU from China.
The European Commission said the countervailing duties were required to equalise the impact of state subsidies in China’s EV sector. It argued that the Chinese government handouts allowed the cars to be sold cheaper than local models in the European market.
The vote turns the page on arguably the biggest trade dispute in the history of EU-China relations – but it is by no means finished, and may ultimately ignite a long-predicted trade war.
The already extensive talks to negotiate a resolution will continue, even though they have so far not yielded a settlement. Chinese companies have offered to place a minimum price on their imports but the EU has rejected the proposals, saying they must reflect the impact of the duties.
“In parallel, the EU and China continue to work hard to explore an alternative solution that would have to be fully WTO-compatible, adequate in addressing the injurious subsidisation established by the commission’s investigation, monitorable and enforceable,” the commission said.
Of the bloc’s 27 member states, just five – Germany, Hungary, Malta, Slovenia and Slovakia – voted against the duties, according to diplomatic sources. There were 10 votes in favour and 12 abstentions, which effectively count as a vote in favour because a blocking majority was required to sink the duties.
Without the 15 votes against required to stop the tariffs, the commission is now empowered to sign them into law by October 30, for the duties to take effect the next day.
Populous member states, including France, Italy, the Netherlands and Poland, voted in favour of the duties. Spain, which had flip-flopped on its vote following intense lobbying from China, abstained.
Ireland, whose dairy sector was threatened with retaliation as part of a Chinese anti-dumping investigation, flipped from an abstention in an indicative poll in July to a vote in favour on Friday.
Car companies from Germany and China slammed the EU’s decision. In quick-fire responses, Mercedes-Benz called the tariffs a “mistake”, while Volkswagen demanded the commission reach a negotiated solution with Beijing before the tariffs go into effect. Geely said the decision would “potentially hinder EU-China economic and trade relations”.
The Federation of German Industries, meanwhile, said it broadly “supports the use of trade protection instruments”, but called on both sides to continue talking.
“The decision on countervailing tariffs in the electric car market must under no circumstances mean the end of the talks,” the federation said.
“German industry calls on both sides to continue the negotiations and prevent an escalating trade conflict.”
The China Chamber of Commerce to the EU expressed “deep disappointment” with what it called “the EU’s adoption of protectionist trade measures”.
This article originally appeared in the South China Morning Post (SCMP), the most authoritative voice reporting on China and Asia for more than a century. For more SCMP stories, please explore the SCMP app or visit the SCMP’s Facebook and Twitter pages. Copyright © 2024 South China Morning Post Publishers Ltd. All rights reserved.
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