BRUSSELS — Chinese electric cars entering the EU from Friday will face subsidy-balancing duties of up to 37.6 percent, according to a legal text that underpins the European Commission’s high-profile investigation into unfair Chinese state subsidies.
The duties differ marginally from the levels the Commission announced mid-June, owing to tweaks in calculations provided by the three exporters that underwent inspections. From Friday, EU customs will demand bank guarantees from the affected companies and decide only in November on whether actual cash will be collected.
BYD will face the lowest level, at an unchanged 17.4 percent. Geely, which owns Volvo and Polestar, gets a slightly lower duty at 19.9 percent. SAIC, the owner of famed British brand MG — now an EV marque — did not manage to reduce its surprisingly high rate of 38.1 percent by much: they will need to pay 37.6 percent now.
That’s also the level for exporters who didn’t cooperate with the EU. Other companies that cooperated with the Commission get charged 20.8 percent.
The Kiel-based Institute for the World Economy (IfW) estimated, based on its modeling that car imports from China could fall in the short term by 42 percent — which would be largely offset by the diversion of European sales to domestic markets and higher imports from elsewhere. EU car exports would only be marginally affected.
In the longer run the effects would be small, estimated the IfW’s Julian Hinz, with the value added in the EU auto industry expected to rise by 0.4 percent while in China it would fall by 0.6 percent.
Stand your ground
By firming up the duties, Brussels stood its ground against Chinese and German pressure. Beijing has already opened trade cases into European brandy (mostly French cognac) and pork meat. It has also threatened to raise taxes on large-engined luxury cars that German manufacturers don’t yet build in China.
The probe has opened a rift between France — which lobbied for the duties — and Germany, whose car industry is much more exposed to China in sales and production. Berlin tried and failed to stave off the duties, for instance by calling for a mere 5 percent addition to the 10 percent import tax the EU already charges on any foreign-made car.
BMW CEO Oliver Zipse said in a statement that “the introduction of additional import duties leads to a dead end. It does not strengthen the competitiveness of European manufacturers.”
The EU’s trade department has plowed on regardless, asserting its control of the highly political file.
Formally, these import premiums are a technical tool meant to cancel out the unfair advantage the Chinese companies enjoy over their European competitors. It’s an area of policy the European Commission has full authority over, subject to confirmation by member countries.
Beijing, however, denies that it has subsidized its EV-makers and accuses the EU of embarking on a trade war. It has sent diplomats over from the capital to Brussels to talk to the bloc’s trade arm and explore ways to avert the duties. These talks are to continue in the following months, but the Commission expects Beijing to admit to the existence of subsidies first.
“Any negotiated outcome to our investigation must clearly and fully address EU concerns,” the EU Trade Commissioner Valdis Dombrovskis said in a statement.
November marks the next important date in the case, when EU countries get to vote on making the duties definitive for five years. Germany might attempt to build a coalition against the premiums but faces tough math: it would need the votes of at least 15 countries, representing 65 percent of the EU population, to block them.
Jordyn Dahl contributed reporting.
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