The European Union’s anti-subsidy investigation into imported Chinese electric cars is set to conclude at the end of this month. Starting from October 31st, the EU will officially impose a maximum import tariff of 45.3% on Chinese electric cars. EU officials have stated that negotiations with China regarding minimum price commitments are ongoing, but reaching an agreement before the end of October seems challenging.
According to a report by Reuters on Monday, a senior EU official mentioned that negotiations with the Chinese government on minimum import prices for Chinese electric cars are being considered as a possible alternative to resolve the electric car tariff dispute. However, this presents a “huge challenge” as the automotive industry is complex, pricing must be justified properly, and must be enforceable.
The official stated, “I don’t rule out the possibility, but reaching an agreement before the end of October seems very, very difficult because there are… very complex, difficult-to-solve issues.” Up to now, commitments on minimum prices have mainly been targeted at homogenous goods, not as complex as automobiles which have various distribution channels.
The official mentioned that the EU has received minimum price quotes from several electric car manufacturers in China and individual exporters.
Last Saturday, China warned the European Commission that negotiating price commitments with some Chinese companies separately while discussing with China on electric vehicle price commitments could undermine the “foundation and mutual trust” of the negotiations.
The official highlighted that focusing on one price commitment while ignoring others is “extremely unusual”. He pointed out that a single price wouldn’t work considering different types of vehicles. In fact, the lowest prices from different manufacturers may vary depending on sales volume and subsidies received.
The anti-subsidy tariffs proposed by the EU on top of the current 10% tariff on automobile imports range from 7.8% for Tesla to 35.3% for SAIC Group, reflecting the EU’s consideration of different subsidies received by various electric car manufacturers.
A decade ago, the EU accepted China’s proposal at the time to replace the anti-dumping tariff on Chinese solar panels with the minimum price commitment. Today, China holds over 90% of the market share in the EU photovoltaic market.
The official stated that the EU has learned from the failure of China’s solar panel minimum price commitment and is aware of China’s widespread circumvention measures. Any commitment related to tariffs must be handled with extreme caution.
He said, “It must be entirely enforceable and subject to very, very close monitoring, with the risk of circumvention significantly reduced.”
EU Commission President Ursula von der Leyen expressed on Monday that the EU aims to maintain a fair competitive environment with China on automobile tariffs and is negotiating with Beijing on price commitments or mechanisms such as investments in Europe as potential solutions to tackle the electric car tariff dispute.
While speaking in Berlin with German Chancellor Olaf Scholz, she mentioned that negotiations with China will continue even if the tariffs on Chinese electric cars by the EU come into effect.
Scholz expressed his hope of reaching an agreement with China before the end of October. He expressed concerns about potential retaliation from the Chinese government in China’s vast market impacting Germany.