EU countries reconsider Chinese EV tariffs as the trade dispute worsens

Sonali Ray, reporter

Brief news

EU countries are uncertain about supporting increasing taxes on electric cars made in China, a trade dispute that has been gaining momentum. Germany is considering ending the taxes due to a third of its car sales last year being in China, while France is one of the strongest supporters. The EU will hold an advisory vote on the issue in the coming weeks, which will be the first public test of support for the Commission. The bloc is set to accept temporary duties of up to 37.6% on Chinese names like BYD, Geely, SAIC, Tesla, BMW, and other western automakers’ models made in China. In October, the EU will vote on whether to accept the Commission’s proposal for multi-year taxes, which would require a “qualified majority” of at least 15 countries or 65% of the EU’s people to vote against. The EU may take a tougher stance towards Beijing due to its tech and green companies being behind their global competitors. A 712-page updated report on Chinese state meddling and funding in April shows that Brussels has learned from its mistake and has studied a wider range of industries, including semiconductors, telecom equipment, and renewable energy.

Illustrated news

BRUSSELS  – EU countries aren’t sure if they should support putting more taxes on electric cars made in China. This shows how hard it is for Brussels to get support for its biggest trade case yet, since Beijing has threatened a lot of different kinds of response.

A government source says that Germany wants to end the taxes because a third of its car sales last year were in China. France, on the other hand, has been one of the strongest supporters.

An informal poll of EU states by Reuters found that most countries are still thinking about the pros and cons of the trade dispute that is getting worse.

In the next few weeks, members will be asked to vote on the problem in an advisory vote. This will be the first public test of support in a case that will be important for the Commission. It is the first time that the EU has looked into a trade case like this without a complaint from the industry.

The bloc is going to accept on Thursday temporary duties of up to 37.6% on Chinese names like BYD, Geely, and SAIC, as well as on Tesla, BMW, and other western automakers’ models that are made in China.

The EU will also vote in October on whether to accept the Commission’s proposal for multi-year taxes when its probe is over. A “qualified majority” of at least 15 countries, or 65% of the EU’s people, would have to vote against these in order for them to be stopped.

40% of the people in the EU live in France, Italy, and Spain, and they have said they support taxes.

Spain’s economy ministry said, “Europe must defend itself if our companies are hurt and do not compete on equal terms.”

Official and government sources said that the Czech Republic, Greece, Ireland, and Poland were still talking about it. Other countries, like Belgium, have caretaker governments, and the Dutch just got a new government this week.

EFFECTS THAT ARE BAD

Germany has made it clear that a solution must be found through talks with Beijing. Its automakers have said that taxes are not the right way to go because they will cause more problems than they solve.

Opponents say that making EVs more expensive for buyers goes against the EU’s plan to be carbon-neutral by 2050. Tesla has said that prices will go up.

Beijing’s response could mean that EU exports of whisky, pork, or expensive cars will have to pay more in taxes.

It says that taxes are needed to counteract incentives like cheap loans, land, raw materials, and other things. The goal is to create a level playing field, not keep Chinese car companies out, which is what the US’s planned 100% tariff is likely to do.

The EU could also use tariffs to gain power in talks with Beijing and encourage automakers to make cars in the EU.

Hosuk Lee-Makiyama, who runs the think tank European Centre for International Political Economy, said that strong votes in both favour and opposition to tariffs could give those who back or oppose them more confidence. He also said that the final positions at the end of the investigation will rest on what China gives in talks.

“If we go to a vote then, it means negotiations have failed,” he stated.

Sixteen trade experts were interviewed, and the results show that the EU may take a tougher stance towards Beijing because its tech and green companies are behind their global competitors. The EV study could be the first step in this direction.

In April, a 712-page updated report on Chinese state meddling and funding came out. This is seen as the clearest sign yet that Brussels means business.

The paper is by far the most in-depth work that the Commission has done. It shows that they have learned from their mistake of not putting taxes on Chinese solar panels ten years ago, which caused the EU’s own industry to fail.

It provides proof to support its claims that China does not follow the same rules. It also includes study into a wider range of industries, not just standard ones like steel, such as semiconductors, telecom equipment, and renewable energy.

That means that there is room for more cases.

A senior fellow at the economic think tank Bruegel in Brussels, Spain, called the study “a set of circumstances that show how and why Europe is changing its policies.” “To be frank, it’s also a message especially for the German chancellery.”

Source : Reuters