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The European Commission lowered its proposed tariffs on China-made electric vehicles (EVs) on Tuesday (20 August) and offered one of the clearest signals yet that it was open to resolving the long-running trade dispute through negotiations, in a move that could ease ongoing trade tensions between Brussels and Beijing.
The Commission said that duties on all three investigated Chinese carmakers would be decreased, with the levy on BYD falling from 17.4% to 17%, Geely from 19.9% to 19.3%, and SAIC from 37.6% to 36.3%.
The duties imposed on “non-sampled” companies that did not collaborate with the Commission’s investigation were also lowered from 37.6% to 36.3%.
An EU official explained that the lowering of tariffs was due to “substantiated” comments received from relevant parties.
However, cooperating companies that were not individually investigated had their duty rate increased from 20.8% to 21.3%. The Commission attributed the increase to a “technical” error involving the application of a formula to calculate the share of companies’ exports to the EU.
The EU executive also announced that duties on US car manufacturer Tesla, which had requested an individual duty rate, have now been lowered substantially to 9%, from the initial level of 21%. The Commission said that this was because it benefited from a correspondingly lower rate of subsidisation from the Chinese government.
Tuesday’s announcements are the strongest conciliatory signal yet by the Commission to Chinese counterparties since the provisional tariffs were provisionally unveiled in June, with spokesperson Olof Gill saying “A solution can be found, certainly, but it needs to be based on evidence.”
“Let me be very clear that no final political decision has been taken,” he said.
“The EU remains open to reaching an effective and WTO-compatible solution, together with the Chinese government, that would address the subsidisation problems established by the investigation [of the] Commission.”
“The picture that we have at this stage… is not yet cast in stone,” said another official.
“There are ongoing [discussions] about the talks with China. The EU is hoping to reach a solution that would be an alternative solution,” the official added.
The Commission did not elaborate on what an alternative solution would look like, refusing to speculate on whether the newly revised levels would be an aggregate increase or decrease in the expected amount of money generated by the duties.
“It is for China to propose a solution that is WTO compatible and that addresses the […] illegal subsidies, as we see them, that the Commission has identified in its painstaking evidence-based investigation,” said Gill.
Meanwhile, the EU also said that not be collecting provisional duties in form of bank guarantees as previously communicated, as “the legal requirements were not met” to do this had not been met, it said.
It added that the duties would likely only be imposed by October 30, after EU member states vote on the duties. Votes from 15 EU countries representing at least 65% of the bloc’s population are required to bloc the tariffs.
However, the Commission also flagged up there was a “risk” that the suspension of duties could lead to a flood of vehicles arriving to the bloc before October 30.
“Of course […] there is the risk that they are going to start piling in Europe, but it takes time for them to transport the cars from China. There is a process that we have to follow,” said an EU official.
The official added the EU will “try to move as fast as possible” and “it is possible that the duties will be imposed earlier than 30 October”.
The end-of-October deadline “is the last possible date,” the official said, adding, “but if everything goes well, this can also be done faster.”
The EU’s announcement comes after China filed an official complaint at the World Trade Organisation (WTO) last week, claiming that the EU measures “seriously violate WTO rules.” The Commission has repeatedly affirmed that its investigation is WTO-compliant.
The decision is expected to ease rising trade tensions between Brussels and Beijing. In recent months the EU executive has announced anti-dumping probes into China-made wind turbines, solar panels, as well as EVs.
The Commission also announced tariffs last month of up to 36.4% last month on Chinese biofuels.
China from its side has launched its own anti-dumping probes into EU brandy and pork exports in January and June respectively.
[Edited by Anna Brunetti/Rajnish Singh]
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