Refer Report

China is continuing negotiations until the end ahead of the European Union’s final vote to confirm the imposition of additional tariffs of up to 35.3% on Chinese electric vehicles.

According to Xinhua News Agency on the 2nd, Chinese Commerce Minister Wang Wentao plans to have a phone call with Commerce Secretary Gina Lemondo soon to discuss economic and trade issues between the two countries, including the imposition of tariffs on Chinese electric vehicles. It appears to be a response to all-out trade checks by Western countries surrounding China.

Starting this month, Canada imposed additional tariffs of 100% on Chinese electric vehicles and 25% on steel and aluminum, which was interpreted as a measure coordinated with the United States and Europe.

Negotiations with Europe over the imposition of high tariffs on electric vehicles are also continuing. Minister Wang visited Europe last month, visiting Italy and Germany, and had a meeting with EU Trade Vice President Valdis Dombrovskis on the 19th of last month. Xinhua News Agency reported that working-level staff from China and the EU are still continuing negotiations.

According to Bloomberg News, the EU plans to decide whether to impose high tariffs on Chinese electric vehicles through a vote among member states on the 4th (local time). For a final tariff to be implemented, at least 15 member states representing 65% of the EU population (55% of EU member states) must vote in favor. The same goes for blocking the imposition of tariffs.

China has aimed to withdraw tariffs, but has been negotiating with even a tariff rate reduction in mind if this is not possible. They used both ‘carrots and sticks’, such as launching an anti-subsidy investigation into EU dairy products, brandy, and pork while promising investment. Accordingly, there are signs of some departure votes.

Spain withdrew its support for imposing tariffs on electric vehicles after being promised billions of euros in investments in hydrogen, etc. German Deputy Chancellor and Minister of Economy and Climate Protection Robert Habeck also said last month, “I do not support additional tariffs on Chinese electric vehicles.” In France, 800 farmers in cognac producing areas recently held a tractor protest demanding the withdrawal of tariffs.

Spain is the largest pork exporter to China, and Germany has been cautious about imposing high tariffs from the beginning out of concern about damage to domestic automobile companies operating in China.

However, the prevailing opinion is that it will be difficult to ultimately change the tariff policy. While Germany and Spain have expressed open opposition, other member states, including France, Italy, the Netherlands and Poland, remain firm in their positions. Italy seemed to deviate from its support for tariffs when Prime Minister Giorgia Meloni visited China last July, but announced on the 16th of last month that it would support the imposition of tariffs.

According to Hong Kong’s South China Morning Post (SCMP), Martin Lucas, head of the European Commission’s trade defense department, said at a European Parliament hearing on the 1st that significant progress had been made following the meeting between Wang and Dombrovskis, but “fundamental challenges” remain.

Chinese automakers requested the EU to set a lower price limit for imported vehicles, saying they would control the price and volume of export products. However, the EU is taking issue with state subsidies for the automobile industry, pointing out that it has excessive production capacity.

Director Lucas said, “In China, there is a spare capacity of 3 million battery electric vehicles per year, and the domestic market cannot absorb them, so they must be exported. “This is 1.6 times the EU’s annual demand for electric vehicles.” This means that tariffs are necessary to protect the industry. “The tariffs are intended to re-establish a level playing field,” Lucas said.

Source: Korean