October 4th 2024.
On Friday, member countries of the European Union came together to vote on whether or not to impose duties on electric vehicle imports from China. This decision comes amidst ongoing discussions between the EU and China to resolve their trade dispute before the looming deadline at the end of October. The issue of electric vehicles has become a contentious topic in the larger dispute over Chinese government subsidies and their impact on European markets. This has led to concerns about the undercutting of EU industry prices and the surge of Chinese exports of green technology to the EU.
The European Commission, which handles trade matters for the 27 member countries, expressed their satisfaction with the majority approval of the duties, despite opposition from influential countries such as Germany and Hungary. These duties are set to take effect on October 31st, unless China is able to find a solution to the dispute. The commission's spokesperson, Olof Gill, emphasized that any solution proposed by China must comply with World Trade Organization rules, address the issue of harmful subsidies, and be enforceable and transparent.
Naturally, China has opposed the imposition of these duties. A spokesperson from China's Commerce Ministry stated their firm opposition to what they see as unfair and protectionist actions by the EU, and their disapproval of the anti-subsidy duties on Chinese electric vehicles. However, this does mean that the EU and China have four more weeks to negotiate and find a resolution. Talks have already taken place between the EU's Commissioner for the Economy and China's Trade Minister, as well as between technical experts from both sides. Negotiations are scheduled to resume on October 7th.
If the duties are implemented, Chinese manufacturers BYD, Geely, and SAIC will face tariffs of 17%, 18.8%, and 35.3% respectively. Geely, which owns brands like Polestar and Volvo, and SAIC, which owns MG, one of Europe's top-selling EV brands, are major players in the market. Other companies, including Western brands like Volkswagen and BMW, would also be subject to tariffs ranging from 20.7% to 7.8% for Tesla. These retaliatory duties have faced resistance from Germany, which has the largest economy in Europe and is home to major automakers. The German auto industry association, VDA, has praised the government's decision to vote against the duties, calling it a step away from global cooperation. However, they do acknowledge the need for negotiations with China to avoid a potential trade conflict.
Hungarian Prime Minister Viktor Orbán has also expressed concerns about the duties, warning that the EU could be starting an "economic cold war" with China. He has pledged to vote against the duties, stating that it could be devastating for the European economy and its 2.5 million auto industry workers and 10 million jobs. According to the commission, Chinese electric cars have seen a significant increase in market share, rising from 3.9% in 2020 to 25% in September 2023. This has been attributed to various subsidies given to Chinese companies, such as cheap land, discounted supplies, and favorable financing from state-owned enterprises and banks. This has raised concerns about the EU's ability to produce its own green technology and protect its industries and workers from unfair competition.
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