European Union member countries are set to vote on September 25 to decide whether to maintain the temporary tariff of up to 37.6% on electric cars imported from China, which the EU started imposing in July. Despite China’s attempts to divide EU member countries and pressure the EU, their efforts seem to be ineffective as the EU remains firm in its stance.
According to reports from “Politico” magazine, Chinese Minister of Commerce Wang Wentao has been on a challenging lobbying mission in Europe over the past week, trying to convince the EU not to impose tariffs on electric cars manufactured in China.
When Wang Wentao sat down for negotiations with EU Commissioner for Trade Valdis Dombrovskis in Brussels, Belgium on September 12, he faced significant risks. It’s less than two weeks before EU member country representatives will vote on September 25 to decide whether to maintain the 37.6% tariff on Chinese electric cars for the next five years.
The EU initiated an anti-subsidy investigation against Chinese electric car manufacturers in October last year. On July 5 this year, it announced the temporary anti-subsidy tax on Chinese electric cars. In August, the EU presented the draft of the formal decision to impose taxes and sought opinions.
On September 25, the 27 EU member countries will have the final vote on the anti-subsidy measures. Unless more than 15 countries oppose, the imposition of a permanent tariff on Chinese electric cars for at least five years will officially take effect on November 2.
In an attempt to reduce punitive tariffs by the EU on Chinese electric cars, some Chinese manufacturers have proposed negotiations with the EU. They have offered to guarantee minimum prices for their electric cars entering the EU market in exchange for tariff exemptions.
However, the EU Commission completely rejected this proposal on September 12. EU officials are waiting to see what Beijing can offer during the negotiations. The EU is also cautious about not reaching any agreement with Beijing that could potentially allow Chinese products to dominate the EU market, learning a lesson from a trade agreement on solar panels with China a decade ago.
Politico reports that when the EU does not relent, China typically attempts to approach individual EU countries using a strategy of “divide and conquer” among the 27 EU member states.
For example, China has scored a PR victory with Spain. On September 11, after a visit to Beijing, Spanish Prime Minister Pedro Sánchez urged the EU to “reconsider” the decision to impose tariffs on Chinese electric cars.
While Spain initially supported the EU’s stance on imposing tariffs on Chinese electric cars due to China’s alleged dumping practices, Prime Minister Sánchez’s statement reflected a shift in position.
Italy is another swing voter China is targeting. However, Wang Wentao’s lobbying efforts in Italy have not been successful.
Italian Deputy Prime Minister and Foreign Minister Antonio Tajani informed Wang Wentao on September 16 in Rome that the Italian government supports the EU’s measures against China’s subsidization of its electric car industry.
Tajani stated to Ansa News after meeting Wang Wentao, “I reiterated to the Minister (Wang Wentao) that Italy is willing to cooperate with this great country, which is both a negotiator in the international market and a competitor in the international market. I reiterated Italy’s position on car tariffs; we support the EU’s position.”
China’s motives for lobbying Italy stem from the fact that Germany, the strongest opponent of tariffs among EU countries, needs at least two major EU countries to support its stance. One from Spain alone is not enough; Germany also requires support from Italy or Poland.
Both Spain and Italy are interested in attracting Chinese battery and electric car manufacturers to invest in their economies. These countries have a history of automobile production and are now looking to transition to electric car manufacturing. Poland may be a harder country for China to convince, as Poland heavily relies on the US as its main security guarantor against Russian threats, and the US is a key advocate for imposing tariffs on Chinese goods.
According to Reuters, China’s Ministry of Commerce warned Chinese car manufacturers about the risks of overseas investments at a recent meeting. The agency “strongly recommended” that Chinese car manufacturers avoid investing in Russia and Turkey while emphasizing the risks of establishing factories in Europe in a more moderate tone.
Before arriving at the EU headquarters in Brussels, Wang Wentao’s itinerary on September 17 included a stop in Berlin. He had a meeting in the afternoon with Germany’s Green Party Minister of Economic Affairs Robert Habeck. The Green Party views communist China as a competitor and a threat.
However, the final decision-makers in the German government are members of the Social Democratic Party, Chancellor Olaf Scholz. Similar to Spanish Prime Minister Sanchez, Scholz has taken a more moderate stance towards China and openly opposed tariffs on electric cars.
Yet, there have been changes in Germany’s overall political landscape. On September 13, German warships Baden-Wuerttemberg and Frankfurt am Main passed through the Taiwan Strait, marking the first time in over 20 years that Germany navigated through the disputed waters in the Asia-Pacific region. The ships, en route from South Korea to the Philippines, garnered widespread media coverage before entering the Taiwan Strait.
German Defence Minister Boris Pistorius stated at a press conference in Berlin, “The signal is very simple; we have always insisted on this, and I have always insisted on this: international waters are international waters.”
Taiwan’s Ministry of National Defense confirmed that the two German warships sailed through the Taiwan Strait from north to south, and the situation remained normal throughout the voyage.
Present circumstances are more challenging to handle than before. The last time Germany deployed naval forces in the Asia-Pacific region was in 2021-2022 under former Chancellor Angela Merkel. At that time, a German warship circumvented the Taiwan Strait, but the Chinese side still rejected the ship’s request to dock at Shanghai port.
The German Federal Environment Agency has halted a total of 45 climate projects cooperatively conducted with China as German companies applying for financial credits for these projects were “strongly suspected of fraud.” Agency head Dirk Messner stated during a press conference, “Our goal is to terminate all 45 suspicious projects with China.”
On Monday, thousands of disgruntled European auto workers gathered in a demonstration in Brussels, Belgium’s capital, protesting the threat of layoffs across the EU automotive industry.
According to the Associated Press, the trigger for this protest was the announcement by German car manufacturer Audi to gradually halt production at its Forest plant in southern Brussels, impacting 3,000 employees, many of whom are experts in electric car production. Police estimates suggest that 5,500 people participated in the protest.
Salvatore Tabone, who worked at Audi for 27 years, faces the prospect of losing his job. He expressed, “What is happening at Audi could also happen in other factories. Thus, we must take action to ensure the industry’s continuity. After the effort we put in, is this the reward we get?”
ACV union representative Lieve De Preter of Belgium stated that the “wave of layoffs” over the past year has affected major industries across Belgium, indicating that this is not an isolated case.
The European Trade Union Confederation (ETUC) stated that Audi’s decision to gradually cease production in Brussels is part of a broader trend of the European industry losing 850,000 job opportunities from 2019 to 2023.
It is expected that the car worker protests could directly impact the EU member countries’ vote on imposing permanent tariffs on Chinese electric cars on September 25.
On September 13, the Biden administration announced a new tariff action primarily targeting China to address a significant loophole that has resulted in the proliferation of fast fashion items, fentanyl, and other duty-free, customs-free small parcel mail flooding the US market.
The Biden administration also stated that it plans to increase tariffs on Chinese electric cars fourfold to slightly over 100%, effective from September 27.
Facing vigorous tariff actions from both the US and the EU, China made a rare move by releasing David Lin, a 68-year-old Chinese American pastor who had been detained in China for 18 years. He was arrested in China in 2006 and sentenced to life imprisonment on charges of “fraudulent contracts.” The US government considers Lin one of three Americans “wrongfully detained” in China. His release signifies a breakthrough in addressing bilateral issues that have long troubled US-China relations, hinting at China’s intention to improve relations.