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EU postpones decision on Chinese EVs, showing internal division

Song Guoyou

Global Times 2024-06-05

(Source:Global Times,2024-06-05)

Illustration: Chen Xia/Global Times

Illustration: Chen Xia/Global Times

The European Commission has apparently postponed the announcement of findings of and potential measures resulting from its so-called anti-subsidy investigation into Chinese electric vehicles (EVs), which were reportedly due to be announced on Wednesday, offering a brief breathing room for rapidly escalating trade tensions between two of the world's biggest traders.

While Western media reports suggest that the delay was due to the European Parliament election from June 6 to 9 and that an announcement would come shortly after the election, Chinese experts said the move highlighted internal division among EU officials, member countries and businesses, which are becoming increasingly worried about countermeasures from China and the breakout of a trade war.

Chinese officials have continued to blast the EU's rising protectionism targeting Chinese businesses and products, while also calling on the EU to address trade disputes through dialogue and consultation, rather than protectionist actions. The persistent stance of China shows both resolve to take necessary measures to defend its interests as well as sincerity in pursuing talks to handle frictions, experts said.

Chaos in EU

Various Western media reports suggested that the European Commission was initially expected to announce the findings of its probe into Chinese EVs, which was launched in October 2023, on Wednesday. However, the decision has been postponed to June 10, so as to keep "the issue out of the election campaign phase," a Reuters report said, referring to the European Parliament election on June 6-9.

Meanwhile, the Hong Kong-based South China Morning Post (SCMP) reported on Tuesday that the European Commission has told Chinese carmakers that it will impose provisional tariffs on Chinese-made EVs starting on July 4. The tariff rate was not disclosed, and after July 4, the commission has four months to consult with member states to turn the provisional duties into permanent ones, the report said.

EU officials have declined to reveal details about the probe and the potential measures. "This is an ongoing investigation, we are not going to comment on it. We will be in a position to announce some provisional elements on it quite soon," Olof Gill, the EU's trade spokesman, was quoted by the SCMP report as saying.

The mixed signals from the EU reflect a chaotic scene unleashed by EU leaders, particularly European Commission President Ursula von der Leyen, who announced the probe despite reportedly facing strong pushback from EU members such as Germany, Chinese experts said. In addition to the reported consideration for the European Parliament election, the postponement also underscores increasingly strong opposition from within the EU, according to the experts.

"The reasons for the situation are multifaceted. It is not only due to political impact from the European Parliament election, but more importantly also due to the fact that there is no consensus within the EU," Cui Hongjian, a professor at the Academy of Regional and Global Governance with Beijing Foreign Studies University, told the Global Times on Wednesday.

Cui said officials from EU member countries such as Germany and Sweden have recently voiced opposition to potential tariffs on Chinese EVs, "because they do not want to see any tariff move lead to a trade war, which will result in a lose-lose situation."

During a press conference in Sweden on May 14, both Swedish Prime Minister Ulf Kristersson and German Chancellor Olaf Scholz voiced opposition. "It is fundamentally a bad idea to dismantle global trade," Kristersson said when asked about the prospects for EU tariffs on Chinese cars, adding that "a wider trade war where we block each other's products is not the way to go for industrial nations such as Germany and Sweden."

Given the unpopularity of the European Commission's move within the bloc, the postponement of the decision is also out of consideration for elections, according to Song Guoyou, a deputy director of the Center for American Studies at Fudan University.

"Imposing additional tariffs will harm both EU businesses and consumers, so EU leaders are hoping to reduce the negative impact of the move on the election result. This is a relatively obvious motive," Song told the Global Times on Wednesday, while noting that given the EU's much larger interests at stake, it should not follow the US' suit despite Washington's pressure.

Song said the strong opposition from EU industries, particularly the auto industry, may have also played a major role in the decision. "The Chinese and EU auto industries are closely intertwined, and imposing additional tariffs will backfire on European carmakers," Song said, noting that Chinese officials have repeatedly stated that China will take relevant countermeasures.

Defending interests

Chinese officials have slammed the EU's probe as being protectionist and discriminatory against Chinese companies, and vowed to take all necessary measures to defend China's interests.

On Wednesday, Mao Ning, a spokesperson for the Chinese Foreign Ministry, again said that trade protectionism severs no one's interests and urged the EU to stay true to its promise of free trade and openness.

"If the EU takes any measure that harms China-EU cooperation, China will not sit back and watch. We will take every necessary measure to firmly safeguard our lawful rights and interests," Mao said at a regular press briefing in Beijing.

Cui said that China has clearly shown its resolve in countering the EU's protectionism to defend its interests. "This effectively shows the EU that insisting on its protectionist way will cause damage to both sides, which is not in either's interests," he said, adding China's stance will also affect the formation of a final decision within the EU.

While Chinese officials have not publicly announced any countermeasures they will take if the EU moves forward with the imposition of additional tariffs on Chinese EVs, there are plenty of options at China's disposal, experts said.

A prominent Chinese car industry insider's call for China to raise temporary tariffs on imported cars with engines larger than 2.5 liters, in order to reduce carbon emissions, has gained widespread attention. Such a move would have a major impact on car imports from the EU, experts said. Sources have also told the Global Times that relevant industries are collecting evidence as they plan to file an application with authorities to launch an anti-dumping probe into certain EU pork products.

Meanwhile, Chinese officials have also called the EU to pursue talks to address trade disputes, instead of unilateral protectionist actions, so as to avoid undermining the broader China-EU cooperation.

Chinese Commerce Minister Wang Wentao has repeatedly advocated for that during his recent trip to Europe. During a roundtable meeting with Chinese businesses in Lisbon, Portugal, on Tuesday, Wang said that China advocates win-win cooperation, but it does not avoid or fear competition. "We welcome healthy competition, and oppose vicious competition based on suppression and crackdown."

During a similar meeting in Barcelona, Spain on Saturday, Wang said China hopes to properly handle economic and trade frictions through dialogue and consultation, with legitimate concerns of both parties accommodated.

Cui said that as China and the EU are at a crossroads in addressing trade tensions, it is critical for both sides to recognize that cooperation is the only best way forward. And recent remarks from Chinese officials "reflected the Chinese side's sincerity and determination to resolve frictions through cooperative dialogue," he said.

2005- ©Center for American Studies,Fudan University.