The European Commission has decided to go ahead with tariffs on electric cars manufactured in China, after no agreement was reached at the meeting between Valdis Dombrovskis, EU economic vice-president, and Wang Wentao, Chinese minister of commerce.
The commercial dispute over electric cars
The main economic dispute revolves around state subsidies granted by the Chinese government to its manufacturers. According to Brussels, this approach distorts fair competition in the European market, opposing“fair and favorable competition” for both parties.
The Commission’s investigation revealed that Chinese manufacturers, including such giants as BYDGeely and SAIC, benefit from massive subsidies that allow them to offer lower prices than their European competitors. However, this has prompted the EU to impose tariffs of up to 38.1% on these electric vehicleson these electric vehicles, in addition to the existing 10% on car imports. These tariffs seek to level the playing field and protect local manufacturers.
Despite the impact the tariffs could have on trade relations, EU countries are divided. While France and Spain strongly support the measure, other countries such as Germany fear that it will lead to a trade escalation that will hurt European industries. Also, Spanish Prime Minister Pedro Sanchez suggested Brussels to reconsider the measure during his visit to China.
The tariffs are provisional, but a vote will be taken in the coming weeks on whether to make them permanent. If a qualified majority against them is not achieved, the European Commission could make them definitive. Despite the lack of an agreement in the negotiations, both sides have agreed to continue talks to find a solution compatible with WTO rules and avoid large-scale“toxic trade competition“.
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Source: mofcom
Photo: Shutterstock
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