Source: AFP
The European Union on Thursday imposed additional provisional duties of up to 38% on imports of Chinese electric cars over “unfair” state subsidies, despite warnings from Beijing that the move would trigger a trade war.
Brussels last year launched an investigation into Chinese electric vehicle makers to investigate whether state subsidies were unfairly undercutting European automakers.
Since announcing the planned tariff hike last month — on top of the current 10 percent import duties — the European Commission has opened talks with Beijing to try to resolve the issue, with China threatening retaliation .
“Our investigation…concluded that battery electric vehicles produced in China benefit from an unfair subsidy, which poses a risk of financial harm to EU electric car manufacturers,” said EU trade chief Valdis Dombrovskis.
In response, the Commission said it imposed provisional duties on Chinese manufacturers, including 17.4 percent on market giant BYD, 19.9 percent on Geely and 37.6 percent on SAIC.
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The rates were slightly adjusted downwards for Geely and SAIC, from 20% initially announced and 38.1%, after further information provided by “interested parties”, it said.
They will start on Friday, with final tariffs to take effect in November for a period of five years, pending a vote by the 27 EU member states.
Electric car makers in China that have cooperated with the EU will face tariffs of 20.8%, while those that have not cooperated will be subject to a 37.6% tariff.
“Intensive” talks with China
The move comes despite talks between Chinese and EU trade officials on June 22, but Brussels will “continue to work intensively with China for a mutually acceptable solution,” trade chief Dombrovskis said.
“Any outcome from our investigation negotiations must clearly and fully address EU concerns and adhere to WTO rules,” he said in a statement.
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Beijing has already signaled its readiness to respond by launching an anti-dumping investigation last month into pork imports, threatening Spanish exports. Chinese media reports that Beijing will activate further investigations.
Chinese officials have also protested investigations targeting government subsidies for green technology, including wind turbines and solar panels.
“It is clear for all to see who is escalating trade frictions and inciting a ‘trade war,'” a spokesman for China’s Ministry of Commerce said on June 21.
The United States has already raised tariffs on Chinese electric cars to 100 percent, while Canada is considering similar action.
But Brussels faces a delicate balancing act as it seeks to defend Europe’s auto industry — the jewel in its industrial crown with iconic brands such as Mercedes — while avoiding a showdown with China and meeting its carbon-cutting targets.
The EU is aiming to get more Europeans driving electric vehicles as it plans to outlaw the sale of new cars powered by fossil fuels from 2035.
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Chinese vehicles’ market share of electric car sales in the EU has risen from around 3% to more than 20% in the past three years, according to the European Automobile Manufacturers Association.
Chinese brands account for about eight percent of that share, he said.
Germany’s Kiel Institute for the World Economy, along with Austrian institutes, predicted that the temporary higher taxes would reduce Chinese vehicle imports by 42%. They added that electric car prices could rise by an average of 0.3 to 0.9 percent in the EU.
German discontent
Germany, a major trading partner of China, is unhappy with the EU’s move. German carmakers fear that any retaliation could hurt their business in China.
German Vice Chancellor Robert Habeck visited Beijing last month on an 11th-hour mission to find a way out of a damaging trade war.
But Germany’s moves to appease China, such as a compromise offer to cut tariffs to 15 percent, have been described by some in the auto industry as a stunt.
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Instead, French carmakers welcomed the tariffs to level the playing field.
Electric car maker Tesla, owned by tech billionaire Elon Musk, is the only company to have asked Brussels for its own tariff rate calculated based on data it has submitted.
Source: AFP
