The escalation has been averted, at least for now: Brussels and Beijing want to negotiate with each other in the dispute over e-car tariffs. The industry is warning against giving in too soon.
In the dispute over tariffs on electric cars, China and the EU have come to an initial rapprochement. Both sides want to negotiate with each other, as has been announced. The Brussels authority had previously published plans to impose tariffs on Chinese electric cars unless another solution is found with China. The EU accuses Beijing of unfairly subsidizing battery-powered models.
It initially remained unclear when and in what context negotiations would take place. German business associations welcomed the willingness of both sides to negotiate. The EU, meanwhile, reiterated its demands.
EU speaks of constructive talks
Chinese Trade Minister Wang Wentao and EU Trade Commissioner Valdis Dombrovskis exchanged views via video conference. A statement from the Chinese Ministry of Commerce later said that both sides had agreed to begin consultations on the EU’s anti-subsidy investigation into Chinese electric vehicles.
A spokesperson for the EU Commission described the talks between the two parties as “open and constructive”. The EU, however, stressed that any negotiation result must be effective against harmful subsidies. In the coming weeks, further talks will take place at all levels.
German industry warns against giving in too soon
“The fact that China, like the EU, is now open to negotiations is an important first step on the way to a solution,” said Hildegard Müller, President of the Association of the Automotive Industry (VDA). The goal must be fair competition for everyone. “Both sides are now called upon to conduct the negotiations openly and constructively.”
Wolfgang Niedermark, a member of the executive board of the BDI industrial association, also welcomed the planned negotiations. Nobody has an interest in uncontrolled escalations. However, the EU would be well advised to stay on its path and “show some teeth,” said Niedermark, who is accompanying Robert Habeck on his trip to China. There are overcapacities and market disruptions not only in the automotive sector, but also in other industries. “And these must be addressed.”
The EU Commission published its plans for punitive tariffs in mid-June. In certain cases, the tariffs of up to 38.1 percent would be retained retroactively from the beginning of July if no other agreement was reached with China. However, the final determination does not have to be decided until the beginning of November.
Habeck praises “first step”
“This is a first step and many more will be necessary,” said Habeck in Shanghai. During the day he had held talks in Beijing with Chinese politicians, including Trade Minister Wang, on the impending tariffs.
Habeck said he had the impression that his messages had become increasingly clear throughout the day. When asked about his possible role, he said he had done what he had to do as German economics minister in the situation. “And whether it was a contribution and how much of a contribution it might have been is something others have to judge.”
Habeck sees opportunity for compromise
Habeck had previously stressed that these were not blanket punitive tariffs, but tariffs to compensate for unfair competitive advantages. He did not criticize the fact that China produces significantly more goods than it consumes. “Overcapacity is not the problem, nor is it the accusation” – and neither are subsidies. The problem arises when state subsidies flow in to increase export opportunities.
Regarding possible compromises in the upcoming negotiations, Habeck said in the evening: “I see some, also in the field of electric mobility.” But now China must make proposals and the EU Commission must lead the negotiations.
Chinese electric cars 20 percent cheaper according to EU Commission
Since last autumn, the EU Commission has been investigating whether electric cars in China benefit from subsidies that distort competition. According to the Commission, Chinese electric cars are usually around 20 percent cheaper than models manufactured in the EU.
The Commission ultimately came to the preliminary conclusion that the value chain for battery-powered electric vehicles (BEVs) in China benefits from unfair subsidies. The Commission therefore threatened additional tariffs. Tariffs of ten percent have been imposed so far.
Brussels’ move followed similar measures by the US. In mid-April, the US government imposed special tariffs on electric cars, semiconductors, solar cells, cranes and other products from China.
Source: Stern
