2024-10-29 19:20:00
Despite Germany’s hostility, Brussels decided, on Tuesday October 29, to add to the 10% tax already in place a surcharge of up to 35% on Chinese-made battery vehicles. The decision, which applies for a period of five years, must be published by Wednesday in the Official Journal of the EU and come into force no later than Thursday, said a European official.
The stated objective is to re-establish fair conditions of competition with manufacturers accused of benefiting from massive public subsidies. The aim is to defend the European automotive sector and its approximately 14 million jobs against practices deemed unfair, identified during a long investigation by the Commission.
The market share of Chinese electric cars has soared in the EU, from less than 2% in 2020 to more than 14% in the second quarter of this year, according to figures from the EU executive.
“We value competition but it must be based on fair competition rules,” declared European Trade Commissioner Valdis Dombrovskis, describing the measures taken by the Union as “proportionate” and “targeted”.
Beijing has repeatedly denounced the EU’s “protectionism”.
Until the last moment, Valdis Dombrovskis continued the dialogue with the Chinese Minister of Commerce, Wang Wentao, to try to find a negotiated solution. In vain. Despite everything, both parties agreed to continue consultations: at any time, the surcharges could be removed if an agreement was found on other means to compensate for the damage identified by the European investigation.
Concern among German manufacturers
For its part, China threatens to strike European interests. It has already responded by launching anti-dumping investigations targeting pork, dairy products and wine-based brandies imported from Europe, including cognac.
Germany and four other countries (Hungary, Slovakia, Slovenia, Malta) voted against the Commission’s tax plan, while largely failing to muster the majority needed to reject it.
The EU is taking the risk of triggering a “trade conflict”, reacted the German automobile lobby (VDA). The country’s automotive flagships, strongly established in the world’s largest market, fear paying the price.
The imposition of European customs duties against Chinese electric cars comes in the midst of a crisis at the Volkswagen group, which plans tens of thousands of job cuts and the closure of three factories in Germany.
The amount of fines will vary
The customs duties, however, received the support of ten member states, including France, Italy and Poland. Twelve others abstained, including Spain and Sweden. “The European Union is taking a crucial decision for the protection and defense of our commercial interests, at a time when our automobile industry needs our support more than ever,” welcomed the French Minister of the Economy, Antoine Armand.
But, in France too, the EU’s approach worries economic circles. The cognac inter-professional association (BNIC) complained of being “abandoned” by the authorities, believing that its sector was “sacrificed” in a commercial conflict which does not concern it.
This Sino-European skirmish is part of a broader context of commercial tensions between the West, led by Washington, and China, accused of anti-competitive practices in several other sectors, such as wind turbines or solar panels.
The European measures, which are intended to be based on facts and respectful of the rules of the World Trade Organization (WTO), however differ from the punitive and more political approach of the Americans. In the United States, President Joe Biden announced on May 14 an increase in customs duties on Chinese electric vehicles to 100%, compared to 25% previously.
In Europe, the amount of fines will vary between manufacturers depending on the estimated level of subsidies received.
In detail, additional taxes will amount to 7.8% for Tesla cars manufactured in Shanghai, 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.
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