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Brussels, |
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EU Imposes New Duties on Subsidized Chinese Electric Vehicles
The European Commission has imposed definitive countervailing duties on imports of battery electric vehicles (BEVs) from China for a period of five years. This decision concludes an anti-subsidy investigation that found Chinese BEV producers benefit from unfair subsidies, posing a threat of economic injury to EU manufacturers.
Although the European Union has imposed definitive countervailing duties on Chinese battery electric vehicles (BEVs), the European Commission remains open to finding an amicable resolution with China. The Commission has expressed its willingness to negotiate price undertakings with individual exporters and is actively engaging with Chinese authorities to explore World Trade Organization (WTO)-compatible solutions. This stance underscores the EU's commitment to fair trade practices and reflects a proactive approach to safeguarding the interests of its domestic industries. By balancing enforcement measures with diplomatic efforts, the EU aims to address the issue of unfair subsidies while maintaining constructive relations amidst evolving global trade dynamics.
On 29 October 2024, the European Commission has officially imposed definitive countervailing duties on imports of battery electric vehicles (BEVs) from China, marking a significant step in addressing what it deems unfair trade practices.
Announced by the European Commission, the decision concludes an anti-subsidy investigation that found Chinese BEV producers receive substantial government subsidies. These subsidies enable Chinese manufacturers to export vehicles at low prices, posing a threat of economic injury to EU-based producers in the rapidly growing electric vehicle market.
Effective immediately and lasting for five years, the duties range from 7.8% to 35.3% and target major Chinese automotive companies such as BYD, Geely, and SAIC.
Tesla, after an individual examination, has been assigned a duty of 7.8%. The move aims to level the playing field for European manufacturers who have struggled to compete with the influx of low-priced Chinese electric vehicles.
While the tariffs represent a firm stance by the EU to protect its industries, efforts are concurrently underway to find World Trade Organization (WTO)-compatible solutions.
However, the European Commission has expressed openness to negotiating price undertakings with individual exporters and continues to engage with China to resolve the issue amicably. This development highlights the EU's commitment to fair trade practices and its proactive approach to safeguarding the interests of its domestic industries amidst evolving global trade dynamics.
Announced by the European Commission, the decision concludes an anti-subsidy investigation that found Chinese BEV producers receive substantial government subsidies. These subsidies enable Chinese manufacturers to export vehicles at low prices, posing a threat of economic injury to EU-based producers in the rapidly growing electric vehicle market.
Effective immediately and lasting for five years, the duties range from 7.8% to 35.3% and target major Chinese automotive companies such as BYD, Geely, and SAIC.
Tesla, after an individual examination, has been assigned a duty of 7.8%. The move aims to level the playing field for European manufacturers who have struggled to compete with the influx of low-priced Chinese electric vehicles.
While the tariffs represent a firm stance by the EU to protect its industries, efforts are concurrently underway to find World Trade Organization (WTO)-compatible solutions.
However, the European Commission has expressed openness to negotiating price undertakings with individual exporters and continues to engage with China to resolve the issue amicably. This development highlights the EU's commitment to fair trade practices and its proactive approach to safeguarding the interests of its domestic industries amidst evolving global trade dynamics.
Duties Imposed by European Commission
- BYD: 17.0%
- Geely: 18.8%
- SAIC: 35.3%
- Other cooperating companies: 20.7%
- Tesla (after individual examination): 7.8%
- Non-cooperating companies: 35.3%
The duties take effect immediately upon publication in the Official Journal. Notably, provisional duties imposed on July 4, 2024, will not be collected.
Ongoing Discussions and Monitoring:
- The EU and China are exploring WTO-compatible solutions to address the identified issues.
- The Commission is open to negotiating price undertakings with individual exporters.
- The effectiveness of the measures will be monitored to prevent circumvention.
- Exporting producers can request an accelerated review for individual duty rates.
- Importers may seek refunds if they can substantiate that their exporting producer is not subsidized.
Steps leading to the new tariff on Chinese vehicles by the EU
The investigation was announced on September 13, 2023, by European Commission President Ursula von der Leyen. It was initiated due to a significant increase in low-priced Chinese electric vehicle exports to the EU. The process adhered to EU and WTO rules, allowing all concerned parties to provide input.
Brief outline of the steps leading to the new tariff on Chinese vehicles by the EU:
Brief outline of the steps leading to the new tariff on Chinese vehicles by the EU:
- Surge in Low-Priced Imports: The European Union noticed a significant increase in imports of low-priced battery electric vehicles (BEVs) from China.
- Concerns Over Unfair Subsidies: EU manufacturers raised concerns that Chinese BEV producers were receiving unfair government subsidies, creating an uneven competitive landscape.
- Initiation of Investigation: On September 13, 2023, European Commission President Ursula von der Leyen announced the launch of an anti-subsidy investigation into Chinese BEV imports.
- Investigation Findings: The investigation concluded that Chinese BEV producers benefit from unfair subsidization, posing a threat of economic injury to EU producers.
- Imposition of Tariffs: Based on these findings, the EU imposed definitive countervailing duties on imports of Chinese BEVs for five years, effective immediately upon publication.
- Ongoing Negotiations: The EU remains open to finding WTO-compatible solutions and is willing to negotiate price undertakings with individual exporters.
EU Tariffs on imported electric vehicles
Standard Import Duty:
- 10% Tariff on Passenger Cars: The EU applies a standard import duty of 10% on passenger cars, including electric vehicles, imported from countries that do not have a free trade agreement with the EU. This tariff applies to imports from countries like the United States and, prior to recent changes, China.
Free Trade Agreements (FTAs):
- South Korea:
- Under the EU-South Korea Free Trade Agreement, tariffs on cars were gradually reduced and have been eliminated since 2011. Electric vehicles imported from South Korea enter the EU duty-free.
- Japan:
- The EU-Japan Economic Partnership Agreement, effective from February 2019, includes provisions to eliminate tariffs on Japanese cars over several years. By 2027, tariffs on Japanese car imports, including EVs, are set to be fully eliminated.
- Canada:
- The Comprehensive Economic and Trade Agreement (CETA) between the EU and Canada aims to eliminate tariffs on industrial goods, including vehicles. While the automotive provisions are complex, there is potential for reduced tariffs on Canadian EVs that meet rules of origin requirements.
- United Kingdom:
- Following Brexit, the EU-UK Trade and Cooperation Agreement allows for tariff-free trade on goods that meet specific rules of origin. Electric vehicles manufactured in the UK can be imported into the EU without tariffs if they comply with these requirements.
- Following Brexit, the EU-UK Trade and Cooperation Agreement allows for tariff-free trade on goods that meet specific rules of origin. Electric vehicles manufactured in the UK can be imported into the EU without tariffs if they comply with these requirements.
Upcoming and Negotiated Agreements:
- Mercosur Countries (Argentina, Brazil, Paraguay, and Uruguay):
- The EU has been negotiating a trade agreement with Mercosur nations, which could eventually reduce or eliminate tariffs on vehicles, including EVs, although the agreement has not been finalized.
Anti-Dumping and Anti-Subsidy Measures:
- United States:
- While there are no specific anti-dumping duties on electric vehicles from the U.S., the standard 10% import duty applies due to the absence of a free trade agreement covering automobiles.
- Other Countries:
- The EU monitors imports for unfair trade practices. If investigations reveal dumping or unfair subsidies in other countries exporting EVs to the EU, similar duties to those imposed on Chinese EVs could be considered.
Rules of Origin and Compliance:
- Rules of Origin Requirements:
- To benefit from reduced or zero tariffs under FTAs, electric vehicles must meet strict rules of origin, meaning a significant portion of the vehicle's value must be produced in the exporting country.
- Environmental and Safety Standards:
- All imported vehicles, including EVs, must comply with the EU's environmental regulations and safety standards, which can act as non-tariff barriers and affect the competitiveness of foreign manufacturers.
Summary:
- Standard Tariff: A 10% import duty is applied to electric vehicles imported from countries without a free trade agreement with the EU.
- Tariff Elimination through FTAs: Countries with which the EU has free trade agreements can export EVs to the EU with reduced or eliminated tariffs, provided they meet specific criteria.
- Ongoing Negotiations: The EU continues to negotiate trade agreements that may affect future tariffs on imported electric vehicles.
Note: Trade policies and tariffs are subject to change due to new agreements, policy shifts, or trade disputes. For the most current information, it is advisable to consult official EU trade resources or recent announcements from the European Commission.
