China announced on Wednesday, October 30, that it had referred the matter to the World Trade Organization (WTO) following the ruling. “protectionist” of the European Union (EU) to impose customs surcharges on electric cars imported from the Asian country. The European Commission adopted on Tuesday the regulation that establishes these additional customs duties against these vehicles, which it accuses of creating unfair competition.
Despite Germany’s hostility, Brussels has decided to add to the 10% tax already in force a surcharge of up to 35% on battery-powered cars manufactured in China. The decision, which is valid for five years, was published on Tuesday afternoon in the EU Official Journal and will come into force on Wednesday.
“China neither approves nor accepts this decision. He filed a lawsuit under the dispute settlement mechanism of the World Trade Organization.announced a spokesperson for the Chinese Ministry of Commerce. “China will continue to take all necessary measures to firmly safeguard the legitimate rights and interests of Chinese companies”he stressed, denouncing “the protectionist approach” of the European Union.
The EU’s stated goal is to restore a level playing field with manufacturers it accuses of benefiting from Chinese public subsidies. It is about defending the European car industry and its approximately 14 million jobs against practices considered unfair after a long investigation by the Commission.
China threatens to hit European interests
The market share of Chinese electric cars has skyrocketed in the EU, from less than 2% in 2020 to more than 14% in the second quarter of this year, according to figures from the community executive. “We value competition but it must be based on rules of fair competition”said the Trade Commissioner, Valdis Dombrovskis, describing it “provided” AND “addressed” European measurements.
Until the last moment he spoke with the Chinese Minister of Commerce, Wang Wentao, to try to find a negotiated solution. In vain. However, the two sides agreed to continue consultations: the surcharges could be removed if an agreement could be reached on other means to compensate for the damages identified by the European investigation.
“China has always advocated resolving trade disputes through dialogue and consultation”the Chinese Ministry of Commerce said on Wednesday. “We hope that the EU will work with China constructively, follow the principles of pragmatism and balance and take into account each other’s main concerns to reach a solution as soon as possible. »
China had threatened to attack European interests. It has already responded by launching antidumping investigations targeting pork, dairy products and wine-based spirits imported from Europe, including cognac.
Germany and four other countries (Hungary, Slovakia, Slovenia and Malta) voted against the Commission’s tax plan, failing to obtain the majority necessary to reject it. The European Union risks triggering a “commercial conflict”reacted the German automobile lobby. The country’s automotive flagships, strongly established in China, the world’s largest market, fear paying the price.
A “politically motivated” decision
The surcharges had received the support of ten Member States, including France, Italy and Poland. Twelve others abstained, including Spain and Sweden. “The European Union takes a crucial decision for the protection and defense of our commercial interests”welcomed the French Minister of Economy, Antoine Armand.
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But also in France the EU approach worries economic circles. The Cognac interprofessional association complained of being “abandoned”believing that their sector was “sacrificed” in a commercial conflict that does not concern him. The Chinese Chamber of Commerce before the European Union, which represents Chinese companies in Europe, condemned this decision on Tuesday, calling it “politically motivated”.
This Sino-European skirmish is framed in a broader context of trade tensions between the West, led by Washington, and China, which is accused of anti-competitive practices in various sectors such as wind turbines or solar panels.
In Europe, the amount of surcharges will vary between manufacturers depending on the estimated level of subsidies received. In detail, additional taxes will amount to 7.8% for Tesla cars made in Shanghai, 17% for BYD, 18.8% for Geely and 35.3% for SAIC, according to a document sent to member countries on September 27. Other groups that cooperated in the European investigation will be subject to surcharges of 20.7%, compared to 35.3% for those that did not cooperate.
