European Commission imposes duties up to 47.6% on Chinese EV imports

The European Commission has imposed provisional countervailing duties of up to 47.6% on imports of battery electric vehicles from China, it confirmed July 4, adding though that it was continuing discussions with China.

It said its investigation into the matter had found that the BEV value chain in China benefitted from unfair subsidization, which caused a threat of economic injury to European BEV producers.

The EC said it had also concluded that there were no compelling reasons that it was not in the EU's interest to impose the measures.

The duties would be introduced from July 5 for a maximum four months after which a final decision on definitive duties would be made via a vote by EU member states, it said. The final decision would then be in place for five years.

The commission said consultations with the Chinese government had intensified in recent weeks, following an exchange of views between Executive Vice-President Valdis Dombrovskis and Chinese Trade Minister Wang Wentao.

"Contacts continue at technical level with a view to reaching a WTO-compatible solution, which adequately addresses the concerns raised by the EU," it said. "Any negotiated outcome to the investigation must be effective in addressing the injurious forms of subsidization identified."

The commission first announced its intention to increase the duties on June 12, although the imposed duties had been adjusted slightly lower than the proposed duties, with the new percentages based on comments on the accuracy of the calculations submitted by interested parties.

The EC said that of Chinese EV makers sampled in its investigation, BYD Group would face an additional provisional duty of 17.4%, Geely Group 19.9% and SAIC Group 37.6%. This was on top of the ordinary import duty of 10% levied on imports of BEVs.

Other cooperating companies would face an extra 20.8% weighted average duty, while for all other companies it would be 37.6%.

The countervailing duties would be introduced from July 5, although a final decision on the final determination would be made at the beginning of November.

The EC said that Tesla in China might receive an individually calculated duty rate at the definitive stage after a substantiated request was made.

VDA response

The imposition of the new duties had come into play despite the German auto industry association, or VDA, calling for the EC(opens in a new tab) to refrain from imposing the proposed anti-subsidy tariffs and rather find a negotiated solution.

In response to the EC's decision, VDA President Hildegard Muller called on both China and the EC to do everything in their power to find a solution through open and constructive dialogue to stop a move away from global cooperation and free and fair trade.

"A possible global trade conflict must be averted. In recent days, both sides have signaled their willingness to talk and are in intensive exchange. We strongly support this approach and appeal to both sides to bring the negotiations to a successful conclusion," she said in a July 4 statement.

She reiterated(opens in a new tab) that BEV import duties were not suitable for strengthening the competitiveness of the European automotive industry, adding that the German industry was committed to free and fair trade.

"Any protectionist measure, including additional tariffs as well as unjustified and market-distorting subsidies, restricts free trade and carries the risk of trade conflicts that ultimately work to the detriment of all sides," Muller said.

"There is no doubt that the results of the anti-subsidy investigation show that the extent and nature of government support in China is a challenge," she added. "But the potential damage that the countervailing duties now provisionally imposed could cause is likely to be greater than the possible benefit of increasing market isolation."

Muller pointed out that a trade conflict would endanger the transformation towards electromobility and digitalization, as China played a crucial role.

She said the duties would quickly have a negative impact in the event of a trade conflict, rather than solving the challenges facing the European automotive industry.

"Instead, the focus must finally be on Europe as an industrial location. Locational attractiveness and competitiveness are the best prerequisites for a successful transformation and for a leading position in international competition," Muller said, calling for an active industrial strategy, including an active trade policy.

"What is needed is an approach that promotes the strengths of our industrial nation, develops the location to be internationally competitive, opens up new markets, focuses on innovation and thus secures prosperity and growth as well as a confident role on the world stage," she said.