12/6/2024 |Articles are machine translated
Vehicles from a Chinese manufacturer ready for export to Europe. | Photo: XPENG
We note that the European Commission has proposed the imposition of provisional countervailing duties on imports of electric vehicles manufactured in China. The Automotive Industry Association has long supported fair and open trade based on a level playing field, but we see the introduction of tariffs as risky. According to representatives of the Czech car industry, additional tariffs will not solve the basic problems of Chinese competition and may prove counterproductive.
The Automotive Industry Association (AutoSAP) has taken note of the European Commission’s (EC) proposal to impose tariffs on imports of Chinese-made electric vehicles at an additional 17.4 to 38.1 percent (i.e. above the existing 10 percent) based on the initial findings of the anti-subsidy investigation. The EC justified this move on the grounds that guaranteeing a level playing field is essential to maintain global competitiveness.
Although the proposal has not yet entered into force and may still be amended before its publication on 4 July at the latest, the Association of the Automotive Industry reiterates its concern about possible negative impacts. “It was the removal of trade barriers that led to the expansion of international trade and the growth of prosperity in recent decades – especially in the automotive sector, which is based on strong exports,” points out Zdenek Petzl, executive director of AutoSAP.
By imposing provisional tariffs, Europe followed the United States, which took such a step this spring. AutoSAP representatives believe that China will retaliate against both continents and further escalate already tense trade relations. For Europe, the Chinese market is the third largest export destination, and the situation of Europe and its supply and production chains is different from that of the USA.
One aspect that cannot be ignored is the import of raw materials and components from China. More than 90 % of the key materials for the production of electric vehicles and the batteries themselves are imported from China by European car manufacturers. Increasing the price of these imports or even blocking them would be a major problem for domestic manufacturers in terms of meeting the EU’s ambitious CO2 reduction plans. Indeed, Europe does not yet have a reliable plan to be self-sufficient in all the raw materials and components needed to produce EVs, or to source them elsewhere. Many companies in China also manufacture and export to Europe. Any tariffs would therefore also apply to these companies.
The introduction of new tariff measures will certainly be felt by Chinese producers and may slow down their expansion, but we do not expect it to affect subsidy policy in China. Companies currently producing EVs for Europe in China can certainly adapt and continue to penetrate the market, whether through local investment, cooperation with local partners or by moving production to other countries.
“We believe that anti-subsidy measures alone, such as additional tariffs, will not solve the problems facing the automotive industry. Instead, we need a systemic approach that will support the strengths of the European industry, which will increase its competitiveness and open up new markets,” says Zdeněk Petzl on behalf of the Czech automotive sector. In his view, the EC should come up with an industrial strategy for the EU and, in cooperation with individual Member States, improve the overall business environment with an emphasis on promoting innovation in the automotive industry. At the same time, ways must be sought to increase the continent’s self-sufficiency in the supply of critical raw materials and components. The regulatory framework within which car manufacturers operate should be just strict enough to allow individual operators to operate and grow freely within it.
