The long-standing and highly anticipated trade dispute between Brussels and Beijing over the imposition of final tariffs on electric vehicles from China is escalating as a crucial vote approaches. The European Commission has rejected a proposal from Chinese exporters to set minimum prices or quantity limits for their electric vehicle shipments as a means to offset subsidies.
On Thursday, September 12, the European Commission’s trade spokesperson Olof Gill stated that several Chinese exporters had submitted “price commitment” proposals, where exporters commit to adhering to a minimum import price to counter subsidies. However, the European Commission deemed this proposal to be inconsistent with the rules of the World Trade Organization (WTO) and the European Union. The Commission did not disclose the specific details of the Chinese proposal.
During a media briefing in Brussels, Gill emphasized that the focus of their review was on whether these proposals could eliminate the harmful effects of subsidies and if they could be effectively monitored and enforced. The Commission’s conclusion was that none of the proposals met these requirements.
Gill added that the Commission remains willing to resolve the issue through negotiations, but any negotiations must fully comply with WTO rules and adequately address the harm caused by established subsidies.
The “price commitment” proposal would exempt Chinese companies from punitive import tariffs on vehicles sold above a certain price. Two weeks ago, Chinese manufacturers including SAIC, Geely, and BYD presented this proposal during an online hearing.
The debate over the final tariffs on electric vehicles from China has intensified, with the EU’s move striking against the Chinese Communist Party’s attempt to avoid punitive tariffs. The EU has stated that due to improper subsidies for electric vehicles manufactured in China, Chinese imports are priced too cheaply, leading to unfair competition for local industries.
Chinese Minister of Commerce Wang Wentao is scheduled to meet with EU trade chief Valdis Dombrovskis on September 19 in an attempt to push for a negotiated resolution on the tariff issue to avoid the signing of tariffs into law before the crucial vote.
Representatives from EU member states will hold a formal vote on September 25, where the proposed final tariffs will be decided upon by the 27 EU member countries. Under EU regulations, unless 15 EU member states (representing 65% of the EU’s total population) vote against imposing tariffs, the final tariffs will come into effect by the end of October and remain in place for five years.
The final tariffs range from 7.8% to 35.3%, in addition to the standard 10% automotive import tariff, specifically targeting additional tariffs on electric vehicles produced in China.