The European Union (EU) executive has announced its intention to impose definitive duties on imports of Chinese battery electric vehicles (BEVs) in an effort to protect the bloc’s homegrown BEV industry from unfair competition from Beijing. The EU Commission shared draft final conclusions of its anti-subsidy probe with Chinese BEV producers, as well as the Chinese and EU governments, on Tuesday. These intended definitive duty rates, if approved by EU member states, would apply for five years from their adoption, leading to longer-term price hikes for Chinese producers.
The Commission has unveiled its intended duty rates for a range of BEV producers, with slight revisions made for three China-based manufacturers – BYD (17%), Geely (19.3%), and SAIC (36.3%) – after they challenged the provisional rates imposed earlier. The duty rate for US company Tesla, which also benefits from Chinese subsidies, is set at 9%, as the company fully cooperated with the investigation and provided comprehensive information on the subsidies it receives.
Additionally, the Commission has revised the duty rates for China-based BEV producers that cooperated in the probe but were individually sampled, as well as for non-cooperating companies. The executive also announced that it would not retroactively collect duties for Chinese BEV imports registered since March, citing a „threat“ of economic harm rather than material harm to EU companies.
The Chinese Chamber of Commerce to the EU has expressed strong dissatisfaction and opposition to the Commission’s actions, labeling them as protectionist. They argue that the competitiveness of the Chinese BEV industry is driven by factors such as industrial scale and market competition, rather than subsidization.
Discussions between Brussels and Beijing have intensified in recent months, as the prospect of Chinese retaliation and a trade war looms. The draft measures provide a glimpse of the long-term tariffs that Chinese BEV manufacturers could face in the EU, following a nine-month anti-subsidy probe that found Beijing’s subsidies were giving Chinese companies an unfair advantage.
The probe and resulting tariffs represent European efforts to confront China’s aggressive trade practices and have sparked tensions between Brussels and Beijing, with China filing a complaint with the World Trade Organization (WTO). The EU Commission remains open to reaching an alternative solution with Beijing that aligns with WTO principles and addresses the subsidization issues identified in the investigation.
The probe has divided opinions within the EU, with Germany expressing skepticism about the punitive measures. German car manufacturers with production sites in China have warned of potential impacts on European value chains. However, Brussels defends the probe as necessary to prevent Europe from losing its industrial base to emerging powers.
In conclusion, the EU’s decision to impose definitive duties on Chinese BEVs reflects its commitment to protecting its domestic industry from unfair competition. The ongoing discussions with Beijing and the potential for a long-term solution demonstrate the EU’s willingness to address trade challenges while upholding WTO principles. The outcome of these negotiations will have significant implications for the future of the EU’s BEV industry and its trade relations with China.