EU bent on imposing protectionist duties on Chinese EVs despite looming lose-lose implications

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By Cui Li, Zhang Zhaoqing, Liao Lei (Xinhua) 08:34, June 14, 2024

BRUSSELS, June 13 (Xinhua) -- The European Commission on Wednesday revealed the provisional duties it plans to impose on imports of battery electric vehicles (EVs) from China, a move expected to impact bilateral economic cooperation and hinder the EU's green transition.

The pre-disclosed provisional duties, ranging from 17.4 percent to 38.1 percent in addition to the standard 10 percent vehicle duty already in place, are due to apply from July 4, according to the Commission.

China's Ministry of Commerce on Wednesday expressed strong dissatisfaction with the EU's plan to impose such duties, describing the move as disregarding facts and World Trade Organization rules.

Such action is "blatant protectionism" that will create and escalate trade frictions, said a spokesperson with the ministry, adding that it not only undermines the legitimate rights and interests of China's EV industry but also disrupts and distorts the global automotive industrial and supply chains, including those in the EU.

This photo taken on June 3, 2024 shows vehicles passing by the European Commission building in Brussels, Belgium. (Xinhua/Zhao Dingzhe)

PROTECTIONIST MOVE TO BACKFIRE

Following Washington's recent increase of duties on Chinese EVs to 100 percent, the EU targets Chinese manufacturers like BYD and Geely, as well as Western producers such as Tesla that export cars from China to Europe.

Officials, executives and scholars have expressed reservations about this investigation and the move to impose higher duties.

Norway's Finance Minister Trygve Slagsvold Vedum, as reported by Bloomberg, emphasized that the country will not join the EU's tariff increase on Chinese electric cars. "Introducing tariffs on Chinese cars is neither relevant nor desirable for this government," he said.

German Transport Minister Volker Wissing said on social media platform X that punitive tariffs from the European Commission are hitting German companies and their top products. "Vehicles must become cheaper through more competition, open markets and significantly better location conditions in the EU, not through trade wars and market isolation."

Hungarian Minister for National Economy Marton Nagy said in a statement that the Hungarian government "does not agree with punitive tariffs, as protectionism is not the solution."

Advocating for cooperation and competition, he said, "instead of restricting competition between manufacturers through punitive tariffs, we should support and help the European electric vehicle industry to become more competitive on a global level."

BMW CEO Oliver Zipse slapped the Commission's plan, arguing that it would harm European companies and interests.

"This decision for additional import duties is the wrong way to go," he said. "From the BMW Group's point of view, protectionist measures, such as the introduction of import duties, do not contribute to successfully competing on the international market."

Employees work at Tesla's Shanghai Gigafactory in east China's Shanghai, Dec. 22, 2023. (Xinhua/Fang Zhe)

For the first time since October 2022, German car manufacturers and their suppliers assessed their current business situation negatively, and "remain pessimistic for the coming months," the Munich-based Ifo Institute for Economic Research said last week.

The EU tariffs on imports of Chinese EVs would backfire with a "noticeable impact on bilateral trade and production in Europe," according to the Kiel Institute for the World Economy (IfW Kiel).

IfW Kiel published the results of a simulation showing that with tariffs of 20 percent, EV imports from China would fall by 25 percent. With China exporting fewer EVs, its demand for inputs for production from the EU will also fall.

EU exports to China in "motor vehicles and parts" could decline by 0.6 percent, or 237 million U.S. dollars, it said. Overall, EU exports to China would fall by over 600 million dollars without China having responded with its own tariff measures.

Chinese Foreign Ministry Spokesperson Lin Jian warned Wednesday that China will take all measures necessary to firmly defend its lawful rights and interests.

To levy additional tariffs violates market economy principles and international trade rules, disrupts China-EU economic and trade cooperation and the global automotive industrial and supply chains, and will eventually hurt Europe's own interests, he said.

This photo taken on March 18, 2024 shows a view of the NIO Power Europe Plant in Biatorbagy, Hungary. (Xinhua/Zhang Fan)

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