There is a risk of escalation between the EU and China over electric cars. The Chinese government does not want to simply accept punitive tariffs from Brussels. The transport minister is very worried.
Federal Transport Minister Volker Wissing (FDP) has warned urgently about the consequences of high punitive tariffs in the EU on electric cars from China. “Nobody wants a trade war with China. It would be a catastrophe for Germany and it would not be beneficial for the European Union either,” said the FDP politician on Thursday in a video interview with the German Press Agency in Berlin. China threatened to file a lawsuit with the World Trade Organization (WTO).
The EU Commission is threatening high provisional punitive tariffs on electric cars from China. When asked how he assessed this step, Wissing said: “I don’t think much of it. The task before us is to ensure that we compete on the market and do not restrict competition. Restricting competition through high tariffs means that the competitive pressure on European manufacturers decreases. And consumers are the ones who lose out, because only competition ensures low prices with the best quality.”
Brussels sees distortion of competition
The EU Commission has been investigating since last autumn whether electric cars in China are benefiting from subsidies that distort competition. According to the Commission, Chinese electric cars are usually around 20 percent cheaper than models manufactured in the EU. EU Commission President Ursula von der Leyen said: “The price of these cars is being artificially depressed by huge state subsidies – this distorts our market.”
According to the Commission, whether the tariffs of up to 38.1 percent actually have to be paid depends on whether another solution can be found with China. In certain cases, they would then be retained retroactively from the beginning of July if the EU agrees to impose higher tariffs in the long term.
China wants to defend its interests
“China reserves the right to file a complaint with the World Trade Organization and will take all necessary measures to resolutely defend the legitimate rights and interests of Chinese companies,” He Yadong, a spokesman for the Chinese Ministry of Commerce, said on Thursday.
The punitive tariffs would not only disrupt “mutually beneficial cooperation” in the field of new energy vehicles, but would also distort the global automotive industry and the supply chain. The European approach is suspected of violating WTO rules and is an “obvious act of trade protectionism.”
Wissing criticizes Commission
The EU Commission must say exactly what it accuses the Chinese side of, said Wissing. Punitive tariffs are being discussed. But the EU Commission still owes the public what exactly it accuses the Chinese side of. “That is why I find this approach extremely questionable. I would suggest that we discuss with our trading partners worldwide the things that we consider to be in need of improvement and work to ensure that the markets remain open and that we have competition.”
Germany is a competitive economy with an industry that produces top products for the whole world. “We depend on open markets and even when markets are open, our top quality from Germany can inspire many people around the world to buy our products,” said the minister. No trade barriers should be put in place.
Wissing: Lower prices for electric cars necessary
“It was always my concern that we would not be able to persuade consumers to switch quickly because the prices for new vehicles are too high,” said Wissing. “That is why we need a solution here, and we will not get it by restricting competition. If cheaper vehicles from abroad are kept off the European market, there is no reason for European manufacturers to offer cheaper vehicles.”
That is why it is important that competition is recognized as a “problem solver.” “I am not worried about the competitiveness of the German automotive industry. It has proven that in the past and it will continue to prove that in the future. But the vehicles are not yet affordable for everyone.”
If manufacturers want to bring electric mobility to the market, the quality has to be right. “That’s the case with German manufacturers. But in terms of price, they have to offer something that is affordable for people and also attractive. And there’s still something missing.”
Criticism also from state minister
Baden-Württemberg’s Transport Minister Winfried Hermann (Greens) said on Thursday: “This is by far the stupidest idea of the EU Commission. Such tariffs would be a shot in the foot, hindering our own export-oriented car industry on the world market. At the same time, it would hinder the electrification of mobility and – even worse – climate protection.” Criticism of the EU Commission has also come from the German automotive industry.
Source: Stern
