EU Warns of ‘Significant’ Gaps in EV Tariff Negotiations with China

October 25, 2024 TruthUSA

If no consensus is reached, the new duties on China-made EVs will kick in on Oct. 31.

The European Union stated on Oct. 25 that negotiations to avoid high tariffs on electric vehicles (EVs) made in China have significant remaining gaps. The tariffs are set to take effect next week.

The EU’s trade chief, Valdis Dombrovskis, conducted a virtual meeting with Wang Wentao, his Chinese counterpart, on Oct. 25. This meeting is part of the ongoing discussions to address Brussels’s concerns over subsidized EVs imported from China, as per the European Commission.

“The principals reviewed the progress made in eight technical negotiating rounds, as well as the remaining gaps,” states a readout of the video call. They have agreed that more technical negotiations will occur soon.

The European Commission is nearing the end of an investigation into Chinese EVs launched by Commission President Ursula von der Leyen a year ago. Preliminary findings released in June indicate that Chinese automakers benefit from unfair state subsidies, posing a threat to the EU’s domestic auto industry. Consequently, Brussels has proposed imposing tariffs of up to 36.6 percent on top of the current 10 percent on EVs made in China to level the playing field.

To avoid the tariffs, China has proposed implementing minimum prices for its EV imports, known as a price undertaking. Last month, the European Commission stated that it is open to negotiations but stressed that any minimum price offer should comply with World Trade Organization (WTO) rules and counteract the harm caused by Beijing’s state subsidies.

However, earlier this month, Beijing cautioned the EU against engaging in separate consultations with individual carmakers, noting that EV manufacturers have authorized the industrial group, the China Chamber of Commerce for Import and Export of Machinery and Electronic Products (CCCME), to present price commitment plans reflecting the industry’s collective standpoint.

“If the European side conducts separate price commitment consultations with some companies while negotiating with China, it will shake the foundation and mutual trust of the negotiations,” China’s commerce ministry said in a statement issued on Oct. 12.

During the video conference on Oct. 25, Dombrovskis emphasized that, per the WTO rules, “the possibility to offer price undertakings is open to the different companies participating in [the] investigation,” as per the readout. He informed Wang that the European Commission’s negotiations with the CCCME “do not exclude discussions with individual exporters,” according to the readout.

If no consensus is reached, the new duties on Chinese EVs will kick in on Oct. 31.

Beijing has repeatedly protested against this move and retaliated with anti-dumping investigations against various imported products from the EU, including brandy, pork, and dairy.

Following the EU’s decision to increase duties on Chinese EVs for the next five years, China’s commerce ministry announced provisional measures targeting EU brandy imports, mainly French cognac. The EU has stated that it will challenge China’s decision at the WTO and will confront any unfair use of trade defense instruments against its economy with utmost seriousness.

Brussels has intensified efforts to counter Beijing’s unfair trade policies. According to Denis Redonnet, the European Commission’s chief trade enforcer, 75 percent of trade investigations initiated last year targeted imports from China.

“That is not a surprise, given the distortions we see there,” Redonnet told the European Parliament’s trade committee on Oct. 14.

Under mounting pressure from Brussels, Janka Oertel, a senior policy fellow at the European Council on Foreign Relations, sees the Chinese regime facing a critical juncture, with neither path appearing promising.

“[Beijing] could initiate a full-on trade war—by raising tariffs on European imports or restricting exports of critical goods to select European countries—to test whether this can compel member states to oppose Brussels’s plans for further measures. Alternatively, it could deepen its involvement in Europe’s industrial ecosystem, seek compromise, and adhere to data localization, local content, and financial transparency requirements,” Oertel stated in an Oct. 25 report.

“The latter is politically unlikely, while the former may be too costly given China’s weakening economy—if member states support Brussels and challenge Beijing’s bluff.”

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