The electric car has become the symbol of the trade war between the West and China, but division over the imposition of tariffs is stifling the community club. The EU intends to hold the final vote on the extraordinary rates on Friday, as a formula to put pressure on Beijing in the midst of negotiations for a solution in which the Asian giant has so far offered nothing that meets the demands European.
The EU plans to vote this Friday on imposing new tariffs of up to 36.3% on electric vehicles made in China. It is normal that the decision is taken, because to overturn it requires the rejection of at least 15 countries which represent 65% of the European population. The powers over trade are in the hands of the European Commission and that is why the threshold for opposing it is so high. Community sources explain, however, that accelerating the decision, which can be taken definitively until October 30, aims to send a message to Beijing while having room to maneuver to refine the proposal in case the governments reject it.
Unfair competition from vehicles manufactured in China, whose subsidies allow them to be sold below the market price thanks to the overcapacity of this country’s industry, has long set off alarms in the EU. With China’s invasion of retinal solar technology, countries like France have been pressuring the European Commission to take action on the issue. “Global markets are now flooded with cheaper Chinese electric cars. Its price is kept artificially low thanks to huge public subsidies. This distorts our market,” President Ursula von der Leyen said during the debate on the state of the EU a year ago.
This investigation concluded that there was unfair competition in this sector and the European Commission’s proposal was to impose additional customs duties on electric vehicles from China, currently up to 36.3%. But this decision has aroused reluctance in countries like Germany, which considers that the maneuver is counterproductive for its automobile industry. There are also companies, such as BMW or Volkswagen, which speak out against customs duties.
Despite this, the imposition of new rates made it through the first European process, when a qualified majority of member states (at least fifteen representing 65% of the European population) approved them in a non-binding vote. As the moment of truth approached, the pressure multiplied.
In this tidal wave where billions of euros are at stake, Pedro Sánchez changed Spain’s position by defending that the EU should “rethink” the decision on customs tariffs. He did so in Beijing, where he was on an official trip, and after meeting with the Chinese government, in which Spain has important interests. In addition to avoiding the retaliation announced by China on pork, which would particularly harm the Iberian pork industry, factories of brands like Polestar or MG are at stake.
Sánchez’s change of heart (Spain voted in favor of customs duties in July) caused deep unease in Brussels because the change occurred in the middle of negotiations with Beijing, which weakened the position of the European Commission. “Follow the money trail,” community sources said at the time about why the Spanish government had changed its mind. What they are saying within the Executive is that a “trade war” must be avoided.
The week after Sánchez’s trip to China and his change of position, a high-level meeting took place between the economic vice-president of the European Commission, Valdis Dombrovskis, and the Chinese Minister of Commerce, Wang Wentao, to address the question. The meeting ended with good words, such as “political will” and “intensify efforts” to reach an agreement, but in Brussels they have many apprehensions because the only offer made by Beijing on the horn does not was not acceptable.
Apart from the fact that it was formulated at the last minute, it was a “floor price” approach aimed at setting a minimum for vehicles imported from China. However, what Brussels is looking for is not only this, but also that Chinese production overcapacity does not flood the Community market, and that it should therefore combine minimum prices with a limitation of exports to the European market. . And while this fierce struggle is taking place, the EU wants to proceed with the vote which, in this case, would be binding to formalize the tariffs from November 1, even if what community sources assure is that there still has room for dialogue and that if an agreement was reached later, it could be canceled.
