Beijing on Wednesday 21 August marked the latest episode in the trade war between the EU and China with the opening of an anti-subsidy investigation into certain European dairy products. The country believes that this agricultural sector, like the European pigmeat sector (see EUROPE 13433/20), benefits from unfair subsidies under the Common Agricultural Policy.
Among the products targeted, the Chinese Minister of Commerce cited fresh cheese and curdled milk, blue cheese and certain milks and creams.
The European Commission’s trade spokesman, Olof Gill, said on Thursday 22 August that the EU was confident that its subsidies complied with international rules and “did not cause injury to the Chinese dairy industry”.
“Should unjustified measures be imposed, the Commission will not hesitate to take all necessary actions to defend the legitimate rights of EU exporters, including through World Trade Organization (WTO) dispute settlement proceedings if necessary”, he added.
The opening of this investigation comes a day after the EU announced the imposition of definitive countervailing duties on Chinese battery electric vehicles on Tuesday 20 August, which will replace the provisional tariffs (see EUROPE 13446/1).
On this point, China believes that the European Commission has not taken sufficient account of its comments throughout the procedure. The final conclusion is “based on ‘facts’ unilaterally determined by the EU side, rather than facts jointly recognised by the two sides”, the Chinese Ministry of Commerce reacted in the wake of the announcement.
This is why, prior to this notification, Beijing had already requested WTO consultations on the EU investigation of 14 August.
Refined countervailing duty rates
The Commission has now reached the stage of informing Chinese electric vehicle producers of its intention to impose definitive duties on 30 October 2024.
Until then, the provisional tariffs in the form of a bank guarantee deducted at the border will continue to apply. However, in its implementing regulation to be published in October, the Commission is not expected to impose its tariffs retroactively, although it has made provision for doing so (see EUROPE 13365/17). Nor will it cash the guarantees deposited as part of the provisional tariffs between July and October.
These two actions are only possible in the event of a material loss established by the investigators. However, the investigation showed only a threat of injury to European producers of electric vehicles with a battery.
“Material damage occurs when you have to close factories, for example. Our legislation allows us to act before employees are actually made redundant. But the criteria for identifying a threat of injury are very strict”, explained one European official.
The results of the survey have also been used to refine customs duty rates by correcting technical errors. The rates for the three companies sampled were revised downwards: - 17% for BYD; - 19.3% for Geely; - 36.3% for SAIC. Companies that did not cooperate with the survey also saw their rates fall slightly, to 36.3%. On the other hand, companies that were not part of the sample but cooperated with the investigators saw their rate increase slightly, to 21.3%.
The request by Tesla, which exports certain vehicles from Shanghai, to benefit from an individual rate has been accepted: the brand’s cars will be subject to a 9% tariff. The justification for this lower rate lies in the fact that the company received far fewer subsidies from China than the rest of the manufacturers, according to the European Commission.
The treatment of joint undertakings between European and Chinese companies that were not yet exporting at the time of the investigation has also been changed: the rate applicable will be that reserved for the Chinese company, rather than the residual rate (companies that have not cooperated). This represents an effective reduction in the tariff, insofar as the residual rate is the highest.
These rates will only apply at the time of final taxation, scheduled for 30 October 2024, and may still be adjusted. The companies concerned still have a few days to submit their comments to the Commission.
The implementing regulation that will impose definitive tariffs must also be approved by the EU27 before coming into force, under the comitology procedure. (Original version in French by Léa Marchal)