The member states of the European Union give their agreement.

Despite the opposition of several States, including Germany, which fears a trade war with Beijing, the member countries of the European Union (EU) agreed to impose customs duties on electric cars imported from China, on Friday, October 4 late in the morning.

The European Commission now has free rein to implement compensatory customs duties of up to 35% on battery-powered vehicles made in China, in addition to the already existing 10% tax. In June, it proposed applying a surcharge to Chinese electric vehicles imported into the EU, following an investigation into unfair practices by Beijing in this sector.

The goal is to restore a level playing field with manufacturers accused of benefiting from massive public subsidies. It is about defending the European car industry and its approximately 14 million jobs against practices considered unfair identified during a long investigation by the Commission.

Germany fears a “trade war”

As expected, the representatives of the EU member countries were very divided during the vote.
The tax project received the support of ten member states, including France, Italy and Poland. Twelve others abstained, including Spain and Sweden, which had nevertheless expressed their hostility. Germany, along with four other countries (Hungary, Slovakia, Slovenia and Malta) spoke against it, but failed to gather the majority needed to overturn the Commission’s decision, according to results sent to Agence France-Press by European diplomats.

These divisions of the Twenty-Seven did not make it possible to gather the necessary qualified majority (at least fifteen Member States representing 65% of the EU population) to formally approve the surcharges. But, in the absence of a clear vote in one direction or another, the European Executive will be able, as it intends, to apply these compensatory customs duties that will also apply to the models of non-Chinese groups meeting in China.

The Commission “should not trigger a trade war” Despite this vote, the German Finance Minister, Christian Lindner, reacted in a press release by calling “a negotiated solution” with Beijing. The German flagships of the car industry, BMW, Mercedes and Volkswagen, strongly established in the world’s largest market, fear paying the price for retaliatory measures. Volkswagen also reacted on Friday by denouncing a “bad approach” of the EU. During a visit to China in September, Spanish Prime Minister Pedro Sánchez, initially in favor of tariffs, called on the EU to ” bye “ assumption.

Continued dialogue with Beijing

The amount of these taxes that the EU will impose varies by manufacturer depending on the estimated level of subsidies received. In detail, the additional taxes will amount to 7.8% for Tesla, 17% for BYD, 18.8% for Geely and 35.3% for SAIC, according to a final document sent to member countries on September 27. . Other groups that cooperated in the European investigation will be charged an additional 20.7% in taxes, compared to 35.3% for those that did not cooperate.

For its part, China denounces an approach “protectionist”. It has already responded by launching antidumping investigations targeting pork, dairy products and wine-based spirits imported from Europe, including cognac.

However, dialogue continues between European Commissioner Valdis Dombrovskis and Chinese Trade Minister Wang Wentao to try to find a negotiated solution to the conflict. At any time, the surcharges could be eliminated if such a solution would make it possible to compensate for the damage identified by the European investigation.

This skirmish is part of a broader context of trade tensions between the West, led by Washington, and China, accused of destroying competition in several other sectors, such as wind turbines, solar panels and even batteries.

The European measures, which aim to be based on facts and respect the rules of the World Trade Organization (WTO), however differ from the punitive and more political approach of the Americans. In a press release published on Friday, the Commission stated that it would continue its negotiations with China to explore an alternative solution fully compatible with WTO rules.

In the United States, President Joe Biden announced on May 14 an increase in customs duties on Chinese electric vehicles to 100%, up from 25% previously.