On August 20 (local time), the European Commission announced a draft final tariff decision, setting the additional tariff rates on Chinese electric vehicles at 17.0 to 36.3 percentage points. Earlier in June this year, the European Union (EU) had announced the highest proposed additional tariff rate of 38.1 percentage points on Chinese electric vehicles, marking a significant escalation in trade tensions between the two economic giants. However, last month, the EU slightly reduced this rate to 37.6 percentage points.

Olof Gill, spokesperson for trade at the European Commission, emphasized in a regular briefing that the pre-announcement of the final tariff rate is a procedure to inform stakeholders and that no final political decision has been made yet. “Today’s pre-announcement is one of the procedures to inform stakeholders,” Gill stated. “I want to make it clear that no final political decision has been made yet.”

The EU’s decision to adjust the tariff rates comes amid ongoing negotiations with the Chinese government. Gill noted that the EU is open to deriving an effective and WTO-compliant solution with China. “The EU is open to deriving an effective and WTO-compliant solution with the Chinese government,” he said. “It is up to China to propose a way that complies with the WTO while addressing the issue of illegal subsidies.”

On the same day, the EU announced that it would effectively nullify the provisional tariffs imposed since September 5. This move is seen as a gesture to facilitate ongoing negotiations and potentially reach a mutually agreeable solution.

China’s Ministry of Commerce responded swiftly, releasing a statement claiming that the EU’s investigation violated WTO regulations and principles of objectivity, fairness, non-discrimination, and transparency. A spokesperson for the Ministry of Commerce criticized the EU’s decision, stating, “The EU’s investigation violated the principles of objectivity, fairness, non-discrimination, and transparency, and did not comply with WTO regulations.” The spokesperson further argued that the EU had decided on high tariff rates while adhering to incorrect practices and distorting the investigation results of Chinese companies. “The disclosed investigation results are a unilateral decision by the EU, not facts acknowledged by both sides,” the spokesperson added.

The spokesperson for China’s Ministry of Commerce also emphasized that China would take all necessary measures to safeguard the legitimate rights and interests of Chinese companies. “China will take all necessary measures to resolutely safeguard the legitimate rights and interests of Chinese companies,” the spokesperson asserted. Additionally, the spokesperson called for resolving the related disputes through consultations.

The draft final tariff decision will be published in the official gazette by October 30 after a vote by the 27 member states and will be implemented for five years thereafter. If confirmed, the final tariff rate will range from 27.0 to 46.3%, including the existing general tariff of 10%.

The backdrop to this development is the broader context of EU-China trade relations, which have been marked by both cooperation and tension. The rapid growth of Chinese electric vehicle manufacturers and their competitive pricing have raised concerns within the EU about market imbalances and the impact on domestic industries. The EU’s decision to impose additional tariffs is seen as a protective measure, while China views it as a violation of international trade principles.

As the situation unfolds, both sides appear to be preparing for further negotiations. The EU’s willingness to nullify provisional tariffs and China’s call for consultations indicate that there may still be room for a diplomatic resolution. However, the outcome remains uncertain, and the final decision will likely have significant implications for the global electric vehicle market and EU-China trade relations.

Source: Businesskorea