China's Ministry of Commerce (MOFCOM) criticized the European Commission (EC)'s draft definitive findings of its anti-subsidy investigation into Chinese electric vehicles (EVs), saying that China firmly opposes the EU's wrong move and vowing to take all necessary measures to safeguard Chinese businesses' legitimate rights and interests. The disclosure of the definitive findings further highlighted the EU's clear discrimination against Chinese EVs, and further complicated the ongoing talks, Chinese experts said. In a statement, a Spokesperson for MOFCOM said that the EU's investigation violated the principles of objectivity, fairness, non-discrimination and transparency, and did not conform to WTO rules. “The definitive findings disclosure released by the EU side did not fully absorb China's opinions, but still insisted on wrong practices, ruled for high tariff rates, and also used samples to treat different types of enterprises in China, distorting the results of the investigation. The final disclosure is based on the 'facts' unilaterally determined by the EU side, rather than the facts recognized by both parties, which China firmly opposes and is highly concerned about,” the Spokesperson said. The official also said that since the end of June, the two sides have held more than 10 rounds of technical consultations.
In its draft definitive findings the European Commission (EC) adjusted certain tariff rates for companies. Among the biggest adjustments was a significant reduction of the rate for U.S.-based Tesla – from the 20.8% it indicated in July to the current rate of 9%. Overall, the EC reaffirmed its previous findings that Chinese EV production had benefited from extensive subsidies and proposed final duties of up to 36.3%, compared with the previous maximum provisional tariff of 37.6%. The EC also slightly lowered tariffs on Chinese firms, including BYD, Geely and SAIC.
Chinese makers of battery-powered electric vehicles are “gravely concerned” over any European Commission move to levy long-term countervailing duties on imports of BEVs from China, as they are seriously considering Europe as a major investment destination, said the China Chamber of Commerce for Import and Export of Machinery and Electric Products. A number of European countries have been hoping that Chinese BEV makers will invest and set up factories in Europe. The EC’s imposing of countervailing duties on Chinese BEV makers aims to hinder the export of Chinese products to Europe and thus encourage Chinese companies to invest in Europe and promote the development of the local automobile industry, help increase local employment and achieve green and sustainable development goals, the Chamber said.
Chinese experts said that the EC's move is clearly discriminatory against Chinese EV companies, as they are facing the highest tariff rates. “I think the EU definitely adopted a relatively different standard for global automakers and Chinese ones,” Cui Dongshu, Secretary General of the China Passenger Car Association (CPCA), told the Global Times. Cui also said that the EU has taken “overly protectionist” measures against Chinese EVs that have gained a competitive edge. “The EU took unreasonable measures against Chinese EVs, mainly to inhibit the development of Chinese EVs in the EU and protect its backward industry. This is unfair treatment for Chinese EVs and completely wrong.”
Trade frictions between China and the European Union escalated further, as the Chinese government announced its decision to take the bloc’s import tariffs on Chinese electric vehicles to the World Trade Organization (WTO) for arbitration. In an online statement, a Ministry of Commerce Spokesman said China had filed a case against the EU at the intergovernmental organization over its preliminary ruling announced in early July. “The EU’s preliminary ruling lacks factual and legal basis, seriously violates WTO rules, and undermines global cooperation in addressing climate change,” the Spokesman said. “We urge the EU to immediately correct its wrongdoing and join hands to safeguard bilateral economic and trade cooperation, as well as the stability of EV industrial chains.” A European Commission Spokesperson said they “took note” of Beijing’s request for consultations. While the tariffs have been provisionally set, they will need to go to a vote of the EU’s 27 member states before November. EVs made by BYD, the world’s biggest-selling battery electric vehicle company, will face a tariff rate of 17% rather than 17.4%. For Geely-made EVs, the rate dropped from 20% to 19.3%. Another 17 companies deemed to have cooperated with the EU’s probe will face a slightly higher rate of 21.3%, up from 20.8%, after the Commission found errors in its initial calculations. Non-cooperating companies will pay the 36.3% maximum rate.
Meanwhile, MOFTEC is considering raising tariffs on imported fuel-powered cars with engines larger than 2.5 liters and has organized meetings with industry personnel, experts and scholars on the measure. Tariffs could be raised to a maximum of 25%. China’s vehicle imports fell by 10% last year from a year earlier to 800,000, which included 196,000 petrol-powered passenger cars with engines larger than 2.5 liters from the EU, according to the China Automobile Dealers Association (CADA). The import value of large engine petrol-powered vehicles from the EU rose by 3% year-on-year to USD17.9 billion last year, higher than the value of EVs exported from China to Europe. Europe has been the primary destination for Chinese-made EVs, with about 38% of China’s 1.2 million EV exports heading to Europe last year. In the first half of the year, China’s EV exports to the EU declined by 15% year-on-year, according to Chinese customs data.
