The member states of the European Union confirmed in a vote this Friday, October 4, the imposition of customs duties on electric cars imported from China, despite the opposition of the Germans who fear a trade war with Beijing.
The European Commission now has a free hand to add to the 10% tax already in place a surcharge of up to 35% on Chinese-made battery vehicles. These countervailing duties are due to come into force at the end of October. The objective is to re-establish fair conditions of competition with manufacturers accused of benefiting from massive public subsidies. This involves defending the European automotive industry and its approximately 14 million jobs against practices deemed unfair identified during a long Commission investigation.
Representatives of EU member countries, meeting in Brussels, voted late in the morning. They were, as expected, very divided. Germany, with four other countries (Hungary, Slovakia, Slovenia, Malta) spoke out against, but largely failed to gather the majority necessary to overturn the Commission’s decision, according to results sent to AFP by European diplomats. 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.
Beijing’s anger
This EU decision has triggered the anger of China, which denounces “unfair, non-compliant and unreasonable protectionist practices”. The Chinese Chamber of Commerce to the EU (CCCEU) expressed this Friday “deep disappointment with this result” and “strongly” encouraged the European Union “to delay the implementation of customs duties and to favor resolution of disputes and trade tensions through dialogue.
Beijing has already responded by launching anti-dumping investigations targeting pork, dairy products and wine-based spirits imported from Europe, including cognac – a sector which this Friday said was “sacrificed” by the EU.
Within the EU, Germany fears that this dispute could turn into a trade war with the Asian giant. Its flagships BMW, Mercedes and Volkswagen, strongly established in the world’s largest automobile market, fear paying the price. The German Finance Minister urged the European Commission this Friday to avoid the outbreak of a “trade war” with Beijing, and the leading European automobile group Volkswagen denounced a “bad approach” for the competitiveness of European industry .
Customs duties which vary depending on the manufacturer
The European executive will be able, as it intends, to implement these countervailing customs duties which will also apply to models from non-Chinese groups assembled in China. Their amount varies according to the manufacturer depending on the estimated level of subsidies received.
In detail, 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 20.7% additional taxes, compared to 35.3% for those that did not cooperate.
The European Commission welcomed Friday having “obtained the necessary support from member states”, in a press release. She stressed that Brussels and Beijing continued to dialogue to try to find a negotiated solution. At any time, the surcharges could be eliminated if such a solution made it possible to compensate for the damage identified by the European investigation.