The European Commission has rejected offers from some Chinese electric car manufacturers to offset the benefits of government subsidies and thus avoid the blow of European duties. The dialogue between China and the European Union to avoid a trade war remains open.
What are the Chinese proposals considered “insufficient” by the EU?
Today, Brussels judged the “price undertaking” proposal to be “insufficient”, which in the jargon of the World Trade Organization (WTO) is presented as a price commitment made by those who export to other countries to increase the cost of the good for the end consumer. It is nothing more than an increase in the list price that certainly makes the product less attractive, but which can avoid the possibility of an anti-dumping duty. Chinese operators have delivered this type of offer to the European Commission to try to convince the community executive to proceed with the tariffs already calculated for the electric car and ready to come into effect at the beginning of November. But the Chinese offer was sent back to the sender.
The European antitrust authority has “thoroughly” analyzed the proposals put forward by Chinese manufacturers, but has not found them to comply with the required criteria. The “details of the offers are confidential”, but the Commission, after having “examined the offers on the basis of WTO rules and European anti-subsidy rules”, has concluded that “none of them meet the requirements”. The attention of the Commission services has focused on “the possibility that the proposals eliminate the effects of the illegal subsidies identified in our investigation and that these prices can be effectively monitored and applied”. Some Chinese companies have also proposed to establish a quota on the number of vehicles shipped, beyond which punitive duties of up to 35.3% would be applied. Again, the offer was not considered sufficiently binding.
China will now have to sit down to find a “negotiated, shared and agreed” solution based on WTO rules, said Olof Gill, the EU executive’s trade spokesman. Negotiations will continue in Brussels next week, when Chinese Trade Minister Wang Wentao meets EU trade chief Valdis Dombrovskis on September 19. That will be the forum to see whether Brussels makes demands and Beijing makes concessions.
Beijing awaits Brussels’ decision
But why did we arrive at this new chapter in the Sino-European tug-of-war on green mobility? Let’s take a step back. This summer, the Commission imposed additional duties, commensurate with the amount of subsidies that Beijing gives to Chinese electric car manufacturers, to offset the competitive advantages conferred by state aid: a 17% tariff for BYD cars, 19.3% for Geely exports and 36.3% for Saic products. All duties that will be added to the 10% tariff already in force on the commercial value of ‘made in China’ introduced within the single market.
The customs duties will come into force by the end of October and will last for five years. The EU heads of state will soon be called to vote, but there are deep divisions on the issue, starting with Spain, which just yesterday asked to reconsider the trade action wanted by the President of the Commission Ursula von der Leyen. To avoid the application of the duties, 15 of the 27 member governments of the Union, representing 65 percent of the population, will have to vote against the trade measure. It will be a long wait for Beijing, which in the meantime is talking to Brussels.
