The high tariffs imposed by the EU on Chinese electric vehicles starting in July 2024 have long been a pain point in Sino-EU trade. Now, the EU has finally taken a key step—compromising with China!

Germany's "Handelsblatt" reported on the 12th that the European Commission announced general guidelines called "price commitments" on Monday. This means that future exporters of pure electric vehicles produced in China can submit minimum price commitments without having to pay high punitive tariffs to the EU!

The European Commission's move is seen as an attempt to ease trade tensions with China!

Strengthening dialogue between China and the EU

According to the document published on the European Commission's website, these commitments must be able to offset the negative effects of state subsidies, and their effectiveness should be equivalent to the current tariffs. These schemes will include information such as minimum import prices, distribution channels, potential cross-subsidies, and future investments in the EU.

The European Commission spokesperson emphasized that this is only a guideline and further measures are needed. The spokesperson clearly stated that the minimum import price could replace the current tariffs on Chinese electric vehicles.

In July 2024, the EU imposed tariffs on Chinese-made electric vehicles, citing the unfair competitive advantage gained by the Chinese government's support for the automotive industry. The EU believes that China has taken countermeasures, including dairy products from the EU, and has also exerted pressure on the EU by restricting exports of rare earths and permanent magnets. SAIC was subject to the highest tariff, at 45.3%, while Tesla had the lowest, at 17.8%.

Report by Handelsblatt

Regarding the new guidelines issued by the European Commission, the Chinese Ministry of Commerce stated on Monday that multiple rounds of negotiations have already taken place between Brussels and Beijing. Both sides agreed that it was necessary to provide general guidance on price commitments for Chinese exporters of pure electric vehicles to the EU.

China also praised the progress achieved as "reflecting the spirit of dialogue between China and the EU." This not only benefits the healthy development of economic relations between the two countries but also helps maintain a rules-based international trade order. Analysts interpreted this statement as a critique of the U.S. government and the trade conflicts it is currently inciting.

The China-EU Chamber of Commerce welcomed the move, calling it a positive signal and referring to it as a "soft landing" in the electric vehicle tariff dispute. The chamber said on X that this move is expected to boost market confidence and provide greater stability and predictability for Chinese manufacturers and suppliers in Europe.

Tariffs imposed on various automakers by the EU

However, this shift has also faced opposition from those within the EU who had strongly pushed for tariffs on Chinese electric vehicles. Some experts at the European Commission had previously decided to oppose the minimum price, arguing that it could easily be circumvented, such as by offering discounts on other products. Moreover, Chinese auto manufacturers would collect the difference between the original dumping price and the agreed minimum price themselves, rather than the EU collecting the difference through tariffs.

Michael Blos (Greens), a member of the European Parliament, criticized: "Europe must not repeat the mistake of the past, where China dominated the solar industry, and make the same error in the automotive sector." He said, "China is pursuing a clear strategy to dominate the global automotive market." Europe must resist this.

European Parliament member Enkai Eroglu (Renew) said that in the short term, the EU successfully stopped China's "aggressive and destructive pricing policy" through tariffs. However, in the long run, China still gained access to the European automotive market. The effectiveness of the EU's negotiation strategy now largely depends on ongoing monitoring and enforcement of the agreement.

Opponents also argue that compared to other countries, the EU's tariffs on Chinese electric vehicles are relatively low: the United States, Canada, India, and some other Asian countries also impose 100% tariffs on Chinese electric vehicles to prevent them from entering the market. Turkey's tariffs are also over 50%. European Commission experts and European competitors worry that if the EU completely removes the tariffs, Chinese cars will flood the European market.

Nevertheless, their opposition has no real significance, as the European Commission's new guidelines have already been released. Moreover, the EU's move is likely to receive a positive response from China, such as reducing tariffs on some EU products.

Chinese automobile car carriers sailing around the world

In fact, despite the tariffs, sales of Chinese automakers in Europe have recently increased. According to data from Marketforce, the share of Chinese electric vehicles in November reached 12.8%. This shows that Chinese electric vehicles entering the EU market is an inevitable trend.

"Handelsblatt" reported that Anhui Volkswagen is likely to be the first manufacturer to benefit from the new regulations. It is a joint venture between Volkswagen and Chinese manufacturer Jianghuai Automobile, based in Anhui, China. The European Commission has been reviewing the company's commitment statement since December. The fully electric Cupra Tavascan SUV produced by Anhui Volkswagen in China will also be exempt from tariffs. In return, Volkswagen has committed not to import this SUV at a price lower than a specific minimum price. The company had previously warned that EU tariffs posed a serious threat to its business model.

Analyzes suggest that according to the European Commission's details, the minimum price measures are unlikely to significantly affect the prices of Chinese electric vehicles, so it is expected that current consumer prices will remain stable. It is claimed that the new details comply with World Trade Organization rules. Overall, this is a big win for Chinese automakers and international automakers producing cars in China and exporting them to Europe, and it is beneficial for strengthening Sino-EU trade.

Original: toutiao.com/article/7594599950625948200/

Statement: This article represents the views of the author.