article

On the 12th local time, the European Commission (hereinafter referred to as "the Commission") stated in a declaration that it would impose additional tariffs of up to 38.1% on electric vehicles imported from China starting from next month.

The Commission stated in the declaration that the tax rates to be levied on three sampled Chinese manufacturers would be 17.4% for BYD, 20% for Geely Automobile, and 38.1% for SAIC Motor.

On the 12th, the spokesperson for the Ministry of Commerce responded to questions from reporters regarding the European Union's preliminary ruling on anti-subsidy investigations into electric vehicles from China. The spokesperson noted that on June 12th, the Commission released a preliminary ruling disclosure on the anti-subsidy investigation into electric vehicles from China, proposing to impose provisional countervailing duties on electric vehicles imported from China. The European side disregarded the facts and World Trade Organization (WTO) rules, ignored China's strong opposition on multiple occasions, and disregarded the appeals and dissuasions from several EU member state governments and industries, persisting in its course of action. China is highly concerned and strongly dissatisfied with this, and the Chinese industry is deeply disappointed and firmly opposed.

The spokesperson for the Ministry of Commerce stated that the determinations disclosed in the European side's ruling lack factual and legal foundations. The Commission disregarded the objective fact that the advantages of Chinese electric vehicles come from open competition, disregarded WTO rules, and disregarded the comprehensive cooperation of Chinese companies in the relevant investigations. It artificially constructed and exaggerated the so-called "subsidy" items, abused the "available facts" rule, and imposed an excessively high subsidy rate, which is a blatant act of protectionism. It is creating and escalating trade frictions, and under the guise of "maintaining fair competition," it is actually "destroying fair competition," representing the greatest "unfairness." The European side's actions not only harm the legitimate rights and interests of China's electric vehicle industry but also disrupt and distort the global automotive industry chain and supply chain, including within the EU.

Advertisement

The spokesperson for the Ministry of Commerce stated that while the Commission holds high the banner of green development with one hand, it wields the stick of "protectionism" with the other, politicizing and weaponizing economic and trade issues. This does not align with the spirit of the consensus reached by Chinese and European leaders on strengthening cooperation, will affect the atmosphere of China-EU bilateral economic and trade cooperation, is not in the interest of EU consumers, and will also undermine the EU's own green transition and the global cooperation on climate change.

The spokesperson for the Ministry of Commerce urged the EU to immediately correct its erroneous practices, earnestly implement the important consensus reached in the recent trilateral meeting between Chinese, French, and European leaders, and properly handle economic and trade frictions through dialogue and consultation. China will closely monitor the subsequent actions of the European side and will resolutely take all necessary measures to firmly defend the legitimate rights and interests of Chinese enterprises.

The Commission stated that after initiating an investigation into subsidies last year, it has formally notified automobile manufacturers, including BYD Company Limited, Geely Automobile Holdings Limited, and SAIC Motor Corporation Limited, to implement the tax collection around July 4th.

The Commission also stated that the investigation reviewed the potential consequences and impacts of these measures on EU importers, users, and consumers. It has contacted the Chinese side to discuss these investigation results and explore possible ways to resolve the identified issues in accordance with WTO regulations.

In this context, the Commission has pre-disclosed the level of provisional countervailing duties that will be imposed on battery electric vehicles (BEVs) imported from China.The European Commission has indicated that if discussions with China fail to reach an effective solution, these provisional countervailing duties will be levied from July 4th through security (the form to be determined by the customs of each member state). Only when the final duties are imposed will the provisional countervailing duties be collected.

In addition to the three Chinese producers sampled, the European Commission stated that other Chinese BEV manufacturers who cooperated with the investigation but were not sampled will be subject to a 21% weighted average tariff; all other Chinese BEV manufacturers who did not cooperate with the investigation will be subject to a 38.1% tax rate.

Sun Lei, a senior partner at Beijing Dacheng Law Offices, told reporters from First Financial Daily that the tax rates ranging from 17% to 38.1% are not low in terms of functionality. A tax of more than 20% on a car still has a significant impact on Chinese enterprises.

Shi Shiwei, a visiting researcher at the Institute for Modern China Studies at Freie Universität Berlin, told First Financial Daily reporters that previously, the German political and business communities were quite opposed to this matter. However, it can be seen that the EU also faces pressure, needing to meet the demands within the EU, including Germany, while also considering the appeals of France and Italy, and providing an explanation to the United States.

Procedures and Next Steps

On October 4, 2023, the European Commission officially launched an anti-subsidy investigation into imported passenger battery electric vehicles originating from China.

This time, the European Commission stated that any investigation should be concluded within a maximum of 13 months after its initiation. The European Commission may announce provisional countervailing duties within 9 months after the initiation of the investigation (i.e., no later than July 4th). Definitive measures should be implemented within 4 months after the collection of provisional duties.

At the same time, the European Commission said that after the application is confirmed, a Chinese BEV manufacturer, namely Tesla, may be able to obtain a separately calculated tax rate in the final stage.

Any other Chinese production enterprises that are not included in the final sample and wish to have their special circumstances investigated may, after the implementation of final measures (i.e., 13 months after initiation), request an accelerated review in accordance with the requirements of the basic anti-subsidy regulation. The deadline for completing the review is 9 months. According to the procedures stipulated in the EU's basic anti-subsidy regulation, before taking any such measures, information about the provisional tariff levels will be provided to all relevant parties (including EU producers, importers, and exporters and their representative associations, Chinese export producers and their representative associations, the country of origin and/or the exporting country, i.e., China), as well as EU member states. This information will also be published on the European Commission's website.

The European Commission also stated that the sampled companies have received information about their own calculation results and have the opportunity to comment on their accuracy. If these final comments provide sufficient counter-evidence, the European Commission can modify its calculation results in accordance with EU law.On the 6th of this month, during a routine press conference, He Yadong, a spokesperson for the Ministry of Commerce of China, stated to a reporter from First Financial Daily that recently, the European Union has been aggressively hyping the so-called "excess capacity in China" and "unfair competition," and has been using various trade measures in a discriminatory manner to launch a series of investigations against Chinese enterprises and products. During these investigations, they have distorted the definition of subsidies and misused procedural rules, leading to a continuous increase in the risk of trade and economic frictions between China and Europe, which has severely affected the confidence of enterprises in cooperating with Europe.

He expressed that China has always believed that China and Europe are important trade and economic partners with a solid foundation for cooperation. Expanding cooperation and achieving mutual benefits through healthy competition is the correct way to interact. The choice of some Chinese automotive companies to establish factories in Europe is a vivid example of the complementary advantages and mutual benefits between China and Europe, which is conducive to stimulating local economies and employment, and promoting the development of the new energy vehicle industry in Europe.

He stated that he hopes the European side will work with the Chinese side to earnestly implement the important consensus reached at the recent trilateral meeting between Chinese, French, and European leaders. They should properly handle trade and economic frictions through dialogue and consultation, taking into account the reasonable concerns of both parties. China will take all necessary measures to resolutely safeguard the legitimate interests of Chinese enterprises.