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The EU imposes temporary tariffs on electric vehicles on China. Experts: The purpose is to exchange the market for Chinese technology
1 week ago

On July 4, the European Commission issued a notice stating that it would impose temporary countervailing duties on electric vehicles imported from China starting from the 5th for a maximum of four months, during which EU member states will vote to decide whether to convert them to a five-year period. Official tariffs.

At present, the EU and the Chinese government are still seeking solutions that are in line with WTO rules through technical discussions.

The European Commission began a countervailing investigation into Chinese electric vehicles in October last year. In June this year, the European Union released pre-disclosure information on imposing temporary countervailing duties on electric vehicles imported from China. The new policy has brought pressure and impact on Chinese auto companies and China-EU cooperation on climate.

It is worth noting that after the European Union officially announced the imposition of temporary tariffs on Chinese electric vehicles last week, Chinese electric vehicle giant BYD signed a US$1 billion investment agreement with the Turkish government in Istanbul on the 8th to build an annual output of 150,000 electric vehicles in Turkey. The factory is expected to be put into operation by the end of 2026.

External analysis believes that Turkey also announced a 40% tariff on imported vehicles from China in early June, which has accelerated Chinese car companies to build factories locally to avoid high tariff increases and also better explore Turkey, a country with a population of more than 80 million. A medium-sized country market.

Investigate disputes

In recent years, climate change has become a severe reality truly felt by all countries around the world. The international community's need to reduce greenhouse gas emissions and achieve green and low-carbon development has become increasingly urgent. As a key part of the clean energy transformation, electric vehicles play a pivotal role in reducing carbon emissions in the transportation sector.

China and the EU have always cooperated closely and pragmatically in the climate field. They are a model of global bilateral green cooperation. They not only enrich and develop the China-EU comprehensive strategic partnership, but also have a direct positive effect on environmental governance, trade and investment between China and the EU, but also benefit the world. However, the EU's countervailing investigation against Chinese electric vehicles since October last year has cast a shadow over China-EU green cooperation.

In this context, on July 6, many experts from the fields of climate change, international relations, and new energy vehicle industry conducted an in-depth analysis of EU tariff policies and their impacts from different perspectives at a symposium held in Qiantan, Shanghai. Explore the development trend of China-EU climate cooperation. "The EU countervailing investigation is conducted in accordance with EU regulations formulated in accordance with WTO rules." Dr. Mo Zhengchun, a director of the Institute for Green Innovation and Development (iGDP), a former senior consultant at the Becker-Friedman Institute for Economics at the University of Chicago, and executive director of the Paulson Institute's Beijing Representative Office, made an analysis of the survey at the seminar.

"A rare feature of this investigation is that the European Commission initiated the investigation on its own without any EU company filing a countervailing investigation request. In other words, the European Commission is both a judge and a plaintiff in this investigation." Mo Zhengchun said that although EU regulations do allow for such special circumstances, it is provided that the European Commission must collect sufficient evidence in advance to match the claims made by EU companies.

The biggest controversy in the entire investigation is the so-called "non-cooperation with the investigation" part of Article 28 of the EU's Basic Countervailing Regulations. The regulations stipulate that if a company under investigation encounters three situations: refuses to provide information; fails to provide information in a timely manner; or obstructs the investigation/provides false information, then the European Commission can use the existing facts (the evidence at its disposal) rather than the evidence provided by the company to directly calculate the countervailing amount and make a ruling.

According to an announcement on July 4, the EU will impose additional temporary tariffs of 17.4%, 19.9% and 37.6% on three Chinese sample companies, BYD, Geely Automobile and SAIC Motor, respectively. Chinese car companies that are willing to cooperate but have not been sampled will be subject to a weighted average tariff of 20.8%, while the tax rate for non-cooperative car companies will be 37.6%.

Some outside analysts believe that the implementation of this policy may have a significant impact on the export strategies of many Chinese car companies. At the same time, China may also introduce countermeasures.

However, Mo Zhengchun believes that the EU's countervailing investigation may not lead to a real "fight" between China and the EU. In the end, it is likely that the EU will exchange the market for China's EV technology. "The EU's attitude towards China's green technology is gradually changing, from being unwilling to face up to the gap to recognizing that China is significantly ahead and is difficult to catch up. Moreover, it is not willing to pursue the United States 'blind suppression measures, so it may use countervailing tariffs to force Chinese car companies to set up joint ventures in Europe and ultimately realize technology transfer."

Mo Zhengchun analyzed from the perspective of geopolitical changes in Europe that China's investment in Europe has declined overall since 2016, but the field of electric vehicles has continued to increase. Among them, investment in Hungary in 2023 will be particularly large, surpassing many countries in Germany, France and Britain.

One of the main considerations behind this is Hungary's friendship with China and will assume the presidency of the European Council in the second half of this year. Hungarian Prime Minister Orban made it clear on July 1 that he was dissatisfied with the EU's excessive supervision and establishment.

"Orban also particularly emphasized that if the EU gets involved in a trade war with China, it will only lose, so the EU should not use a trade war to escape competition, but should strengthen its relations with China." Mo Zhengchun said.

Use rules to gain benefits

Yu Hongyuan, director of the Institute of Public Policy and Innovation at the Shanghai Institute of International Studies, believes that the WTO rules and standards on which the EU investigation is based remind China that "we must also learn to strive for our own interests to the greatest extent in different normative systems."

"The EU wants to build a stronger and safer Europe. At the same time, can the EU's own technical reserves achieve the net-zero emission goal? Will it abandon its net-zero emission target under the current circumstances, or will it block green products? I feel that Europe also emphasizes a diversified green supply chain strategy and continues to adhere to the 2050 climate goal of net-zero emissions and strategic autonomy, but will try the green economy trade toolbox policy. For example, it used to emphasize global cooperation first, but now it highlights the single market within the EU. Construction." Yu Hongyuan said.

Yu Hongyuan added that Europe faces internal policy conflicts including investment, policies and markets. China can not only safeguard its own interests from the level of trade disputes, but also promote China-EU cooperation from the docking of third-party cooperation in investment in Europe.

Mo Zhengchun also believes that China needs to actively participate in the formulation of new rules and standards for international green trade and cannot passively follow. We must also make full use of the new opportunities brewed and formed by new international trade rules to promote the low-carbon transformation of key domestic industries.

"If China and the EU can move towards each other, the electric vehicle countervailing negotiations may become a new opportunity for China and the EU to explore green trade integration. China's 'new three things' may create a new development model under the new geopolitical normal. Chinese companies must change their single low-cost export method, improve their ability to plan and layout their sea-going strategies, and truly form a multinational enterprise model with Chinese characteristics." Mo Zhengchun said.

"I believe that the EU will be balanced"

Tang Xu, former director of the Disaster Reduction Department of the World Meteorological Organization and professor-level senior engineer at the Institute of Development and the Institute of Atmospheric Sciences of Fudan University, said that judging from the determination of European countries and the EU to implement climate policies, they should be confident in Europe's vigorous adoption of renewable energy. The demand gap in European countries for green technology products, including electric vehicles, is huge.

"Although European countries face a series of problems, such as regional security conflicts between Russia and Ukraine and trade protectionism, they will affect the process of European climate governance to a certain extent. But we should be confident that European countries will make more efforts to balance these challenges. We will neither advance radical climate policies unrealistically, nor will we blindly allow the spread of trade protectionism." Tang Xu said.

"China and Europe have a regular intergovernmental cooperation and coordination mechanism. The key is to formulate these mechanisms from some strategic planning levels, formulate dynamic collaborative and mutually beneficial frameworks for climate policy, green industry development, and bilateral trade, implement forward-looking consultation mechanisms, and do a good job in substantively promoting the entry of green technology products into each other's markets. Actively prepare." Tang Xu said, for example, in terms of the output of electric vehicles, their components, solar panels, etc., how to jointly formulate corresponding standards and policies with Europe to form consensus compliance standards, move forward, and guide enterprises to carry out green technology products in an orderly manner. trade. At the implementation level, enterprises should use industry associations and use research results to better understand relevant policies of EU countries and Europe, and avoid blindness and blindness. Both aspects should be done well.

"Therefore, I believe that there will be good prospects for cooperation between China, the European Union and European countries in climate resilience governance." Tang Xu said.