Brussels (Belgium) (AFP) – EU countries gave a definitive green light on Friday to hefty additional tariffs on electric cars made in China, despite strong German opposition and fears it will trigger a trade war with Beijing. The European Commission — which provisionally approved the step in June after an inquiry found that Beijing’s state aid to auto manufacturers was unfair — now has free rein to impose steep tariffs for five years from end October.
China has slammed the “protectionist” tariffs and promised retaliation, but talks on addressing the subsidy dispute will continue between the two sides despite Friday’s vote. Ten member states including France, Italy, and Poland supported imposing the tariffs of up to 35.3 percent, coming on top of existing duties of 10 percent, several European diplomats told AFP. Only five, including Germany and Hungary, voted against while 12 abstained, including Sweden and Spain. Madrid initially supported tariffs before reversing course to call on Brussels to “reconsider” its decision.
Although the tariffs did not win support from a majority of states, the opposition was not enough to block them — which would have required at least 15 states representing 65 percent of the bloc’s population. That leaves the choice on moving ahead in the hands of the European Commission — in charge of trade policy for the bloc — which said it had “obtained the necessary support for the adoption of tariffs”.
After the vote, China’s commerce ministry urged EU states to “return to the right track” by resolving trade frictions through dialogue. “China firmly opposes the EU’s unfair, non-compliant and unreasonable protectionist practices in this case,” it said in a statement shared by state broadcaster CCTV.
– ‘Fatal signal’ –
The EU duties have pitted France and Germany against each other, with Paris arguing they are necessary to level the playing field for EU carmakers against Chinese counterparts. Germany, renowned for its strong auto industry and its key manufacturers including BMW, Volkswagen, and Mercedes heavily invested in China, urged the commission not to go ahead. The vote’s results demonstrate how the EU’s biggest trade investigation in years has ruffled feathers, with the bloc’s biggest economy vehemently against the duties.
“The EU Commission should not trigger a trade war despite the vote in favour” of the tariffs, German Finance Minister Christian Lindner said. “We need a negotiated solution.” Berlin has strong arguments on its side: Beijing has threatened to hit back hard and has already opened probes into European brandy, dairy, and pork products imported into China. “We will face all types of retaliation from China, that’s for sure,” one diplomat said.
China tried in vain to stop the duties from coming into force through dialogue, but talks have so far failed to produce an agreement that satisfies the EU. Any duties could be lifted later if China addresses the EU’s concerns.
– Carmakers divided –
French and German automakers are likewise divided over the duties. German auto giant Volkswagen said they “are the wrong approach,” while BMW stated the vote was “a fatal signal for the European automotive industry.” Both manufacturers urged more talks to prevent a trade conflict. Meanwhile, US-French-Italian auto group Stellantis said it “takes note” of the vote, repeating its commitment to “free and fair competition,” echoing similar cautious comments made by the umbrella group, the European Automobile Manufacturers Association.
The extra duties also apply, at various rates, to vehicles made in China by foreign groups such as Tesla — which faces a tariff of 7.8 percent. Chinese car giant Geely — one of the country’s largest sellers of EVs — said Friday’s decision was “not constructive and may hinder EU-China economic and trade relations, ultimately harming European companies and consumer interests.”
– EU’s tightrope –
Brussels says it aims to protect European carmakers in a critical industry that provides jobs to around 14 million people across the European Union but does not benefit from massive state subsidies like in China. Canada and the United States have in recent months imposed much higher tariffs of 100 percent on Chinese electric car imports.
Trade tensions between China and the EU are not limited to electric cars, with Brussels also investigating Chinese subsidies for solar panels and wind turbines. The bloc faces a difficult task as it tries to foster its clean tech industry and invest in the green transition without sparking a painful trade war with China.
© 2024 AFP
