As expected, on Wednesday 12 June the European Commission confirmed its decision to impose provisional tariffs on imports of Chinese battery electric vehicles. The amount of the countervailing duty had not been known until now: it will range from 17.4% to 38.1%, depending on the producer. This will be in addition to the usual customs duty of 10% for these vehicles.
The Commission’s investigation confirmed the existence of Chinese state subsidies throughout the value chain: from the extraction of raw materials for batteries to the sale of finished vehicles. These are direct subsidies, preferential taxation and even the supply of land at below market prices.
To determine the amount of the countervailing duty, the Commission focused on three producers that responded to requests for information: BYD, Geely and SAIC. The amount of aid paid by China and the level of cooperation from these three groups has made it possible to determine the following individual rates: 17.4% for BYD, 20% for Geely and 38.1% for SAIC.
According to the data it provided, BYD received fewer subsidies than other manufacturers. BYD is set to become the world’s leading manufacturer of electric vehicles at the end of 2023, overtaking Tesla.
Other companies manufacturing electric vehicles in China that have cooperated with the investigation will be subject to a 21% rate. The same applies to European companies that manufacture vehicles on Chinese soil before exporting them to the EU. For others, the rate will be 38.1%.
Tesla has submitted a request for an individual rate in respect of the definitive countervailing duties that will potentially be imposed in November, and the request appears justified at this stage, according to a European source. Tesla is currently subject to the 21% rate.
The measure will not come into force until 4 July, the deadline by which the Commission may impose a provisional tariff. As required by European regulations, it communicated the amount of the tariffs to the companies concerned before they were imposed. They may send their comments until 19 July.
Provisional customs duties will have to be confirmed with definitive duties. The Commission has until 4 November to do so. It will also decide at that time whether the rates will be retroactive or not. In March, the Commission made the vehicles concerned subject to customs registration, so that it could potentially impose countervailing duties retroactively (see EUROPE 13365/17).
See the notice of provisional rates: https://aeur.eu/f/cmm
China reacts
Following the Commission’s announcement, Beijing reacted by denouncing “purely protectionist behaviour” on the part of the Europeans. China “will take all necessary measures to firmly defend its legitimate rights”, said Chinese Ministry of Commerce spokesman Lin Jian.
According to the Chinese Chamber of Commerce to the EU, Beijing has prepared countermeasures. In January, China already opened an anti-dumping investigation into wine spirits originating from the EU.
The European Commission believes that the provisional tariffs on Chinese electric vehicles are legitimate and in line with the rules of the World Trade Organization. “Our goal is not to close the European market to Chinese electric vehicles, but to ensure that competition is fair”, said European Trade Commissioner Valdis Dombrovskis.
Industry reception
Some German manufacturers, including BMW, Volkswagen and Mercedes-Benz, do not share this analysis, with Hildegard Müller, President of the German automobile association VDA, saying that the tariffs “do not meet the challenges” facing the industry.
The representative of European car manufacturers, ACEA, also believes that the problem lies elsewhere. Its Director General, Sigrid de Vries, believes that what the European automotive sector “needs above all else to be globally competitive is a robust industrial strategy for electromobility”.
The NGO Transport & Environment (T&E) has welcomed the announcement of the tariffs, but is also calling for a broader industrial policy to support the production of clean vehicles.
German MEP Daniel Caspary (EPP), who has just been re-elected, believes that imposing tariffs is simply the right response to Chinese exports, which distort competition. “It is important that the EU protects its car manufacturers in Germany and Europe”, he told Agence Europe. (Original version in French by Léa Marchal)