EU confirms steep tariffs on Chinese electric vehicles - Euronews

Brussels accuses Beijing of lavishing its car-makers with enormous amounts of subsidies that lead to artificially low prices and unfair competition.

The European Commission has confirmed what seemed to be a predetermined conclusion: steep tariffs will be slapped on China-made battery electric vehicles (BEVs) as of 5 July, a momentous decision poised to redefine relations with Beijing and invite retaliatory measures against European producers.

The step, previewed in early June, is the result of a nine-month investigation that found subsidies being pumped across the entire supply chain of BEVs produced in China, both by domestic and foreign companies. Public money was detected everywhere, officials said, from the mining of raw materials needed to churn out batteries to the shipping services employed to bring the finished products to Europe's shores.

The sheer scale of subsidies allows Chinese producers to offer their BEVs at noticeably lower prices than those assembled in the bloc, where energy and labour costs are much higher. The price gap has triggered a rapid surge in imports of China-made BEVs: from a 3.9% market share in 2020 to 25% at the end of 2023, according to the Commission.

This wave of low-cost imports represents a "threat of economic injury" to the EU industry that could lead to devastating losses and put at risk more than 12 million direct and indirect jobs, the executive warns.

Tariffs are therefore necessary to offset the unfair advantage granted by subsidies.

The decision published on Thursday foresees differentiated duties, calculated according to the parent company, annual turnover and suspected amount of subsidies received. They will come on top of the existing 10% rate.

• BYD: 17.4%
• Geely: 19.9%
• SAIC: 37.6%
• Other BEV producers in China that cooperated in the investigation but have not been individually sampled, including Tesla and BMW: 20.8%
• Other BEV producers in China that did not cooperate: 37.6%

The introduction of the measures will be, for the time being, provisional. Customs authorities will request bank guarantees, rather than cash, from Chinese exporters, meaning end customers might not immediately notice a change in their pocket.

Member states will hold a first vote in two weeks but this will be non-binding and serve to test the political waters. The tariffs will remain in place until a final decision is taken in four months, which countries could block if they mount a qualified majority against the proposal. (15 member states representing 65% of the bloc's population.)

Germany, a world-class car exporter with strong ties to the Chinese market, and Hungary, a growing hub for Chinese investment, are among those likely to oppose.

The German Association of the Automotive Industry (VDA) says "tariffs are not an adequate measure" to strengthen competitiveness" and can potentially unleash a "lose-lose situation." The organisation is particularly concerned about the effects on joint ventures, like the ones Volkswagen and General Motors have with SAIC.

By contrast, France and Italy support the additional levies, which suggests the November vote will be preceded by an all-out political fight.

High stakes, low hopes

In the meantime, Brussels and Beijing will discuss possible solutions that could avert the permanent introduction of tariffs. The talks will be at the political and technical level.

"What the EU wishes for is a solution. It is not the introduction of tariffs. The introduction of tariffs is not an objective per se, it is a means to correct an imbalance and unfair competitive situation to the detriment of producers of electric vehicles in the EU compared to those who are producing in China," a Commission spokesperson said.

"We want this dialogue with our Chinese counterparts."

Hopes for a breakthrough are nevertheless low.

Beijing has contested the investigation in form and substance, calling it a "naked protectionist act" that "artificially constructed and exaggerated the so-called subsidies," and has vowed to "take all necessary measures" to defend domestic companies.

Last month, China's Ministry of Commerce launched an anti-dumping investigation into pork imports coming from the EU, a move widely seen as a prelude to retaliation. Agriculture and aviation are considered the sectors most vulnerable to Beijing's wrath.

On Thursday, a spokesperson from the ministry struck a conciliatory tone: "There is still a four-month window before arbitration, and we hope that the European and Chinese sides will move in the same direction, show sincerity, and push forward with the consultation process as soon as possible."

The China Chamber of Commerce to the EU was more critical, saying it was "deeply disappointed and dissatisfied" with the Commission's decision, which it said was "driven by political factors" and would "harm consumer interests."

The anti-subsidy investigation has been described as one of the most consequential in recent memory and comes at a low point in EU-China relations over a string of disagreements, such as Russia's invasion of Ukraine, tensions in the Taiwan Strait, the repression of the Uyghur minority and disinformation campaigns.

The subsidies injected by the Communist Party have been a perennial source of friction and have been blamed for decimating the bloc's solar industry. These memories are still raw in Brussels and have weighed heavily on Thursday's decision.

"We have not forgotten how China's unfair trade practices affected our solar industry. Many young businesses were pushed out by heavily subsidised Chinese competitors," Ursula von der Leyen said in September while announcing the BEVs probe.

"This is why fairness in the global economy is so important – because it affects lives and livelihoods. Entire industries and communities depend on it. So, we have to be clear-eyed about the risks we face."

This article has been updated with more information.

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2024-07-04 09:14:43Z
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