June 13, 2024
BRUSSELS, BEIJING – The European Commission announced on Wednesday that Chinese-made battery electric vehicles will soon be subjected to punitive countervailing tariffs following its anti-subsidy investigation launched in October.
The commission said it “has provisionally concluded that the BEVs (battery electric vehicles) value chain in China benefits from unfair subsidization, which is causing a threat of economic injury to EU BEV producers”.
The commission said the countervailing duties will vary depending on the brand, including 38.1 percent tariffs on SAIC, 20 percent on Geely and 17.4 percent on BYD, and the new tariffs will come on top of the existing 10 percent import tariffs.
China has expressed grave concern and strong dissatisfaction following the European Commission’s decision, the Ministry of Commerce said on Wednesday.
It has also called on the European Union to immediately rectify its wrongful actions and seek dialogue and negotiations to effectively address the ongoing trade friction between the two sides, a spokesperson said in a statement released on the ministry’s website.
The decision, which disregards factual evidence and World Trade Organization rules, has been made despite China’s repeated strong objections, and it ignores the appeals and warnings from several EU member states’ governments and industry sectors, the spokesperson said.
The ruling also fails to recognize that China’s competitive advantage in the electric car industry is a result of fair and open competition, and the decision is a violation of WTO rules and a failure to acknowledge the comprehensive cooperation of Chinese companies during the investigation, the spokesperson added.
Furthermore, it is a blatant act of protectionism that will escalate trade friction and undermine fair competition under the guise of “maintaining fair competition”, which will not only jeopardize the legitimate rights and interests of China’s electric car industry, but also disrupt the global automotive supply chain, the spokesperson said.
The actions taken by the European Commission not only harm the interests of European consumers, but also jeopardize the EU’s own goals of green transition and collaboration in addressing climate change on a global scale, according to the spokesperson.
China will keep abreast of the developments on the EU side and is prepared to take necessary measures to firmly protect the rights of the Chinese companies involved, the spokesperson added.
Also on Wednesday, the Foreign Ministry urged the EU to honor its commitment to support free trade and reject protectionism.
Lin Jian, a ministry spokesman, said at a daily news briefing that the anti-subsidy investigation is a typical act of protectionism.
Lin said that using the investigation as a pretext, the EU plans to impose tariffs on EVs imported from China, which violates the principles of the market economy and international trade rules.
The move will also damage China-EU economic and trade cooperation as well as the stability of global automotive supply chains, ultimately harming Europe’s own interests, he said.
Misguided approach
The spokesman added that political figures from several European countries and representatives from the European auto industry have recently expressed opposition to the anti-subsidy investigation, saying that they believe imposing additional tariffs on Chinese EVs to protect the EU industry is a misguided approach.
“Protectionism is not the way forward, while openness and cooperation are the right path,” Lin said.
He urged the EU to work together with China to uphold the overall situation of China-EU economic and trade cooperation. China will take all necessary measures to firmly defend its legitimate rights and interests, he added.
The European Commission said it has reached out to Chinese authorities to discuss the findings and explore possible ways to resolve the issues in a WTO-compatible manner.
“Should discussions with Chinese authorities not lead to an effective solution, these provisional countervailing duties would be introduced from July 4,” the commission said.
In a statement on Wednesday, the Chinese Chamber of Commerce to the EU expressed “its shock, grave disappointment and deep dissatisfaction with the protectionist trade measure” by the European Commission.
“The CCCEU believes these measure will seriously impair the legitimate rights and interests of BEV companies and exert negative impacts on China-EU trade and cooperation in the automotive sector,” it said.
According to a recent CCCEU survey within the Chinese BEV industry, imposition of a 10 percent additional levy would already carry significant implications for most Chinese car manufacturers, resulting in a substantial negative impact on their exports to Europe.
The rates ranging from 17.4 percent to 38.1 percent will pose a serious market barrier, the CCCEU said.
Despite China’s strength in the global BEV production and sales market, exports of BEVs to the EU accounted for only about 5 percent of China’s BEV production in 2023. The market share of China’s BEV brands in the European market has consistently remained lower than that of local European companies, according to the CCCEU.
The CCCEU also said that the EU’s investigation into China’s BEVs was politically motivated, driven by protectionism, and lacked substantive complaints from its own industry.
“In contrast, numerous European industry representatives have voiced concerns regarding the investigation, citing potential negative impacts on Chinese and European BEV supply chains, innovation and market cooperation,” the CCCEU said, adding that the chamber and the Chinese car industry also share these concerns.
Carl Bildt, co-chair of the European Council on Foreign Relations and a former Swedish prime minister, said on social media on Wednesday that he’s “not too worried by what is said to be Chinese EV subsidies — if they want to subsidize the EU green transition, which really needs to speed up, then it’s OK with me.”
David Henig, director of the United Kingdom Trade Policy Project at the Brussels-based European Centre for International Political Economy, wrote on social media: “In essence, the real purpose of EU tariffs is giving the domestic industry a few years to become closer to competitive as the Chinese industry or to receive investment from them. Yes there are subsidies, but so there are everywhere. China started on EV way earlier.”
Minister of Commerce Wang Wentao, on a recent trip to Europe, dismissed accusations of “unfair competition” made by the EU and the United States, calling them groundless. He said some countries are implementing high tariffs, discriminatory subsidies, investment restrictions and unilateral sanctions that contravene WTO rules, with the aim of excluding Chinese companies from their markets.
“This is not fair competition at all,” Wang said.