Mikołaj Woźniak, Konrad Falkowski
Grand Finale – EU adopts proposal for tariffs on Chinese electric vehicles
After many months, what German Chancellor Olaf Scholz feared most has finally happened – European Union member states voted in favor of the European Commission’s proposal to impose countervailing duties on Chinese electric cars. As Justyna Szczudlik from the Polish Institute of International Affairs rightly points out, it was possible to do it “despite intense lobbying and pressure”. In her opinion, it is also a “groundbreaking” decision, because it “changes the state of play to offensive because it hits Chinese production and exports”, thus the EU is able to protect the domestic industry of zero-emission vehicles, which was not possible to do more than a decade ago in the case of the photovoltaic panel industry.
The European Union is a bloc of countries in which it is often difficult to achieve unanimity in decision-making, because each of the individual members has their own particular interests, which are often elevated above the interests of the entire Union (which is understandable and hardly surprising). In this case, this unanimity was not to be expected either. Reuters has made a clear comparison of how individual countries voted. 10 Member States voted in favor of the introduction of tariffs, i.e. Italy, France, Poland, the Netherlands, Ireland, Latvia, Lithuania, Estonia, Bulgaria and Denmark. On the other hand, only 5 countries were against: Germany, Hungary, Malta, Slovenia and Slovakia. However, the largest part of the voters, as many as 12, decided to abstain from voting, which in the case of this vote was ultimately counted as votes in favor. This group included the following countries: Belgium, Croatia, the Czech Republic, Greece, Spain, Cyprus, Luxembourg, Austria, Portugal, Romania, Sweden and Finland. It is clear that the European Union is divided and is unable to develop a coherent position on such an important issue as the future of the EU electric car market. France Burwell of the Atlantic Council noted that both Ursula von der Leyen and China can consider themselves victorious to some extent. In his opinion, the vote for tariffs is “a legal victory for the Commission but a political victory (sort of) for China”, as evidenced by the high number of abstentions. In this way, it can be expected that Beijing will play harder and harder to break the already fragile unity of the EU, which may cause those who have abstained now to vote in accordance with the Chinese vision in the future.
The European Commission’s regulation, according to which the voted tariff proposals are to enter into force, had to be announced by 30 October (which happened the day before this date, which will be discussed later). However, according to the announcement on the European Commission’s website, the imposition of tariffs is not intended to be the end of consultations between Brussels and Beijing. On the contrary. It can be read that both the EU and the PRC “continue to work hard to explore an alternative solution that would have to be fully WTO-compatible, adequate in addressing the injurious subsidization established by the Commission’s investigation, monitorable and enforceable.” But will such an agreement actually be reached? This seems to be a dubious scenario. A much more realistic option appears to be Beijing’s retaliatory actions, the stirrings of which have already been seen in previous months as China launched investigations against goods of European origin, such as brandy, pork and dairy.
At the same time as the results of the vote were announced, there was also a response from China. The Ministry of Commerce of the PRC said in the words of its spokesperson that “China strongly opposes the unfair, non-compliant and unjustified protectionist practices of the EU” and “strongly opposes EU compensatory measures against Chinese electric vehicles”. Nevertheless, despite criticism and opposition, China “also notes the EU’s political will to further resolve the issue through negotiations.” Therefore, the PRC calls on the European Union “to really demonstrate its political will and return to the right path of resolving trade tensions through consultations.” However, this does not change the fact that in the last sentence, the ministry’s spokesperson announced that “China will also take all measures to firmly secure the interests of Chinese enterprises.”
China imposes tariffs on European brandy
On 8 October, the Ministry of Commerce of the People’s Republic of China issued Notice No. 42, according to which it was decided to introduce provisional anti-dumping measures in the form of a levy on imported brandy from the EU as of 11 October this year. The value of Chinese tariffs is expected to fluctuate between 30.6% and 39%. As indicated in the release, the dumping investigation was initiated on January 5, 2024 and the preliminary ruling was issued on August 29 (which we also wrote about in the August edition of the Review). The results of the investigations indicated that dumping was indeed supposed to take place, but China refrained from introducing tariffs, which was supposed to be a gesture of goodwill and to some extent force Brussels to make a similar gesture on the issue of electric vehicles. However, nothing like this happened and China also did not decide to give up its intentions.
The ministry’s statement was also confirmed by its spokesman, who was asked about this situation and the status of other Chinese anti-subsidy investigations. He said that all investigations are based on both China and World Trade Organization (WTO) rules. He also added that Beijing plans to “introduce measures such as increasing tariffs on imported vehicles powered by high-displacement fuel.” At the very end, he delivered the standard formula that can be picked up by following the speeches of Chinese officials: “China will take all necessary measures to resolutely protect the legitimate rights and interests of Chinese industry and enterprises.”
On the same day, the European Commission issued a statement on the above topic. Namely, according to its content, the EC directly undermines the legitimacy of the Chinese investigation: “Abuse of trade defence for inappropriate reasons is a clear breach of WTO rules. Accordingly, the Commission will robustly challenge at WTO level the announced imposition of provisional antidumping measures by China on imports of brandy from the EU.” Moreover, the Commission expressed its willingness to help European companies that would suffer from the tariffs imposed, describing them as an “unwarranted decision by the government of China.” Like the Chinese in their statements, the Commission has made it firm that it will defend its interests: “The Commission will always stand firmly and fearlessly on the side of EU producers, industry, open and fair trade, and a global level playing field.”
PRC’s response to the EU’s complaint to the WTO
A day after the publication of the European Commission’s statement on the transfer of the dispute over Chinese tariffs on European brands to the World Trade Organization level, a spokesperson for the Ministry of Commerce of the PRC expressed China’s stance. In the first sentence of his speech, he made it clear that “China’s anti-dumping measures against imported brandy originating in the EU are legitimate trade remedies.” In contrast, he questioned the legitimacy of European tariffs on Chinese electric cars, saying that “the EU anti-subsidy investigation into Chinese electric vehicles was not based on industry requests.” He added: “In fact, the relevant EU Member States and their industries have also had serious reservations about this” and that the measures taken by the EU “are seriously lacking in fact and law, clearly violate WTO rules and in fact constitute trade protectionism in the name of trade defence measures”. He concluded by declaring that China was an enemy of the abuse of trade remedies and called on the European Union “to immediately correct its abusive practices and jointly protect the overall economic and trade situation between China and the EU”. Will the EU accede to this call? Extremely doubtful.
China invites EU for further consultations
Asked about the status of the EU-China consultations on tariffs on Chinese electric cars, a spokesperson for the Chinese Ministry of Commerce said that despite eight rounds of talks starting on September 20, progress had been seen but was still blocked by “significant differences between the two sides.” And the result is that a satisfactory resolution of the dispute is not achieved for either party.
The ministry representative added that “China’s attitude and sincerity in seeking solutions through dialogue and consultation have not changed” and the PRC continued to invite the EU to hold talks through specially designated technical teams. China also expected to find a “middle ground ” and speed up consultations in order to “reach the right solution as soon as possible”.
The second question, closely related to the subject, asked by one of the reporters during a speech by a spokesperson for the Ministry of Commerce of China, was the issue of reports according to which the European Union was to hold individual talks with individual Chinese companies on price commitments. At the very beginning, the spokesman sought to emphasize Beijing’s sincerity during talks with Brussels: “China has always conducted dialogue and consultations with the European side with the greatest sincerity and goodwill.” However, in direct reference to the question, he expressed his concern, saying that if the EU continues to do so, it will “shake the foundations and mutual trust of the negotiations, disrupt the talks between the two sides and be detrimental to the progress of the overall negotiation process.” The spokesman, on behalf of the ministry and the People’s Republic of China, concluded his speech by expressing his triple hopes: first, that the EU “will fully demonstrate its sincerity”, secondly – “will take seriously the main concerns of the industry” and thirdly – “a solution acceptable to all parties will be reached as soon as possible based on the current consultations”.
Former Taiwanese president’s tour of Europe
The first stop of the trip of former Taiwanese President Tsai Ing-wen was the Czech Republic, where on October 14 she took part in the 28th International Conference Forum 2000 in Prague. It was her first visit since stepping down in May this year. As Tsai announced on her Facebook profile, the purpose of the visit was to draw the attention of “friends of the Taiwanese people” to the need to take decisive action to protect democracy and freedom in the world and to develop relations between Taiwan and Europe. Tsai stressed that modern authoritarian regimes seek to extend their form of government to other countries, for which they use various methods, including information warfare, threats or even invasion itself. As an example, she pointed to Taiwan, which, as she stated, “is on the front line of attack”. She also added that the latest manifestation of this is the announcement by the authorities of the People’s Republic of China of new military exercises near the island.
At the opening of the conference, the former President of Taiwan was officially welcomed by the President of the Czech Republic, Petr Pavel. However, according to his office, no individual meeting with Tsai Ing-wen was planned. On the same day, Tsai also held meetings with the speakers of both houses of the Czech parliament.
The next leg of Tsai Ing-wen’s journey was France, where she met with a group of current and former members of the French parliament on 16 October. Among other things, she held a meeting in the French Senate with a group of senators led by Jean-Baptiste Lemoyne, the leader of the group of friends of Taiwan operating at the French Senate. It was the first visit by a Taiwanese president to the upper house of the French parliament since the direct presidential elections in 1996.
During the meeting, Lemoyne stressed that both France and Taiwan are actively involved in the Indo-Pacific region. He noted that both countries are united by the desire to maintain strong ties based on common values and interests. According to Hao Pei-chih, Taiwan’s representative to France, Tsai’s visit will significantly contribute to strengthening relations between France and Taiwan, the effects of which, he said, he “looks forward to.” He also added that Tsai’s trip to Paris was kept secret due to concerns about potential “unnecessary disruptions”.
Tsai was accompanied by National Security Council Advisor Alex Huang and former Minister of Economy Wang Mei-hua. Alain Richard, former French Minister of Defence (1997-2002) and former Chairman of the Franco-Taiwanese Friendship Group, was also an important supporter of the visit. Alain Richard, even before the end of his term in the Senate, actively promoted relations between France and Taiwan.
Tsai Ing-wen’s last trip to Europe was Brussels, where she was welcomed on 17 October by the vice-president of the European Parliament, Pina Picierino from Italy. In her honor, there was also a reception organized by the Slovak MEP and Quaestor of the European Parliament Miriam Lexmann, which was attended by about 50 members of the European Parliament. In her welcome speech, Lexmann expressed recognition of Tsai’s courage and determination to defend freedom in the face of growing authoritarianism. She also stressed that European countries have the right to deepen relations with Taiwan and should not be limited in this. In response, Tsai expressed her gratitude for the European Parliament’s long-standing support for Taiwan. She also appealed to global democracies to jointly counteract the expansive policy of the People’s Republic of China.
The Chinese authorities firmly criticized Tsai Ing-wen’s trip to Europe. China’s Foreign Ministry, by spokeswoman Mao Ning, expressed strong opposition to the visits, accusing Taiwan’s supporters of acting contrary to the One China policy. Mao Ning called on, among others, the Czech Republic and other countries to consistently adhere to the One China policy, as well as to respect the sovereignty and territorial integrity of the PRC with China, are unacceptable. She also appealed to the Taiwanese authorities to “stop striving for independence, because they are doomed to failure.” She added that all political manipulations and attempts to obtain foreign support will become unsuccessful.
Scholz and his criticism of EU tariffs on Chinese electric vehicles
During his speech before the Bundestag on 16 October, German Chancellor Olaf Scholz touched on many topics troubling Germany and the European Union. He brought the issues related primarily to the war in Ukraine, the escalation of the conflict in the Middle East, as well as the state of the German economy and EU tariffs on Chinese electric vehicles on the floor. In reference to the latter topic, he expressed his considerable criticism. The speech took place ahead of the meeting of European leaders at the next European Council.
In the context of the EU’s relations with China, it can be read that it is not only Germany that is an expression of skepticism towards the decision made – it is as many as 17 member states, as well as the directors of automotive companies with whom he was supposed to hold talks. Scholz addressed the entire EU with the following words: “My request is that we come to an agreement between China and the European Union”, which can in fact be treated as a suggestion that the President of the European Commission is not going to reach such a deal with her actions.
It is worth noting here that this is another time this month when the German chancellor expresses his opposition or a form of criticism of the offensive actions taken against China by the European Commission. In early October, two days before the approval of the countervailing tariff proposal was announced, Scholz announced that trade would intensify if there were “more partners from more countries”. Therefore, in his opinion, in such a case, “negotiations with China on electric vehicles must continue and why we must finally tackle the areas where cheap Chinese imports are harming our economy, for example steel.”
It would not be a fantasy to say that Scholz will not step down from his point of view. The same is true for the European Commission headed by Ursula von der Leyen. There is a conflict of interest here that will not be easy to resolve, and this will be necessary when the Union is in need of cementing unity rather than further fragmentation.
Kaja Kallas on China
Recent candidate for NATO Secretary General and incoming (due to take office on 1 December) High Representative of the Union for Foreign Affairs and Security Policy, Kaja Kallas, expressed her opinion on Russia and China in a letter to the European Parliament ahead of the hearing on her nomination.
She mentioned China several times. Her priority in dealing with China – as she said herself – will be to “safeguard the EU’s geopolitical and economic security” in fruitful cooperation with other European Commission commissioners. She also explicitly pointed out that “the most pressing challenges here are China’s support for Russia as well as structural imbalances between the EU and China that result from non-market policies and practices, which create unfair competition and unlevel playing field.” This narrative fits perfectly with the doctrine of Ursula von der Leyen, who wants to make the European economy more and more independent of the Chinese economy (the so-called de-risking doctrine). Therefore, it is not difficult to predict that Kallas will openly support the EC president in her efforts related to China.
Further on, it can be found information that an important emphasis will be placed on detecting and countering hybrid threats, among which Kallas also (partially) includes the People’s Republic of China: “Only by keeping ourselves safe from malign external influence and threats can we ensure the EU is a strong power in global affairs. Actors such as Russia, Iran, North Korea, and partly China, aim at weaponising interdependencies and exploiting the openness of our societies against us.” The future EU High Representative juxtaposed the countries that are now increasingly referred to as the “axis of evil” or “CRINK”, presenting them as an actual threat to Europe. Although the term “partially” in relation to China may suggest minimal hopes for the possibility of cooperation with Beijing.
Kallas’s opinion resonated so much that the Chinese propaganda mouthpiece “Global Times” decided to also speak out on this issue, and more specifically, Cui Hongiajn, a professor at Beijing University of Foreign Languages, expressed his opinion. He first noted that Kallas’s remarks reflected “the trend of following the US in terms of narrative, and even policy.” He went on to say that Kallas has juxtaposed China with a bloc of countries such as Russia, Iran and North Korea, suggesting that China itself is hostile to Europe – and this is also (in his opinion) a sign of following Washington, which could further complicate relations between Brussels and Beijing: “If the EU continues to jump on the US bandwagon, the China-EU relationship, which has already experienced some undesirable turbulence, especially in the public opinion environment, will probably suffer more problems in the future.” At the end of his thought, Cui added that Kallas is not a representative of all EU institutions, let alone individual member states, so “the European perception of China should not be based solely on the rhetoric of some politicians.”
Video call between Dombrovskis and Wang
On 25 October, a video call took place between the European Commissioner for Trade, Valdis Dombrovskis, and the Chinese Minister of Trade, Wang Wentao. The conversation obviously concerned the issue of countervailing duties on Chinese electric cars adopted by EU countries and negotiations related to price commitments. Both sides summarized the eight rounds of meetings held, as well as what could not be negotiated. Moreover, they confirmed their willingness to reach a satisfactory solution to both Brussels and Beijing. In addition, they agreed that further technical meetings will be held soon.
According to the meeting’s readout on the European Commission’s website, Dombrovskis stressed that WTO rules regulate the possibility of making price commitments in an open manner to various companies involved in the investigation, therefore engaging in talks with individual exporters outside of negotiations with the China Chamber of Commerce for the Import and Export of Machinery and Electronic Products (CCCME) does not appear to be a contradiction of the standards set by the WTO. In addition, he expressed his doubts about the legitimacy of the anti-dumping investigations undertaken by the Chinese against brandy, pork and dairy products of European origin.
For his part, Wang Wentao pointed out that further negotiations related to price commitments should be based on “mutual reconciliation with fundamental concerns” and on “pragmatism and balance”. Moreover, the Chinese are very eager to have another meeting within the framework of technical negotiations, and “welcomed the EU team to come to China as soon as possible.” And in the context of China’s investigations against European goods, Wang has consistently argued that all investigations are in line with WTO rules and national laws that will “fully protect the legitimate rights and interests of all concerned.”
Stubb in China
On October 28-31, Finnish President Alexander Stubb paid a state visit to the People’s Republic of China, where he met with President Xi Jinping and other senior Chinese government officials. The president was accompanied on the trip by his wife, First Lady Suzanne Innes-Stubb, as well as key ministers, Foreign Minister Elina Valtonen, Minister of Climate and Environment Kai Mykkänen, and Minister of Agriculture and Forestry Sari Essayah. The delegation was complemented by representatives of the Finnish Parliament, including Ville Skinnari and Sakari Puisto, and representatives of leading Finnish companies such as Nokia, Vaisala, UPM and Oilon. It was Alexander Stubb’s first visit to China since taking office as president of Finland, as well as the first visit by a Finnish head of state to China in five years. The previous one took place in 2019, when former President Sauli Niinistö visited China.
During the visit, an action plan for 2025-2029 was signed, including cooperation in the areas of technology, health, food, education and tourism. A noticeable change compared to previous agreements was the limitation of cooperation on Arctic issues, which results from Finland’s partnership with the U.S. and Canada. Other agreements include an agreement to export Finnish poultry to China and an announcement of cooperation between Finnish universities of applied sciences and Tsinghua University.
During the meeting, Xi Jinping stressed that Finland was one of the first Western countries to establish diplomatic relations with the People’s Republic of China, as well as the first to sign an international trade agreement with it.
The talks also focused on the Russian-Ukrainian war. Prior to his visit to China, President Stubb met with a number of European leaders and conveyed to Xi Jinping that North Korea’s support for Russia was an escalation and a provocation. Stubb also stressed that China’s relationship with North Korea “is not very comfortable at the moment” and warned that China’s continued support for Russia could negatively affect relations with the European Union. “The more China supports Russia, the more difficult the relationship with Europe, and especially the European Union, becomes,” Stubb said. The Finnish president also pointed out that “peace cannot be negotiated without Ukraine’s participation.” In addition to issues related to the war in Ukraine, the talks also covered the situation in the Middle East and the topic of relations between the European Union and China.
During the visit of the President of Finland, the case of a Hong Kong-registered cargo ship that may have been involved in the damage to the Balticconnector gas pipeline connecting Inkoo in Finland with Paldiski in Estonia was also discussed. The incident occurred in 2023, likely as a result of damage to an anchor, resulting in an expensive six-month repair.
EU tariffs on Chinese electric vehicles enter into force
On 29 October, the European Commission issued a regulation according to which the anti-subsidy investigation is terminated from that date. The results of the investigation make it clear that “the BEV value chain in China benefits from unfair subsidization” and this in turn poses a threat of “economic injury to EU producers of BEVs”. Therefore, “definitive countervailing duties on imports of battery electric vehicles (BEVs) from China for a period of five years”.
However, the Commission’s press release states that the European side remains willing to consult with the Chinese side “towards finding alternative, WTO-compatible solutions.” In the same way, the Commission is still willing to negotiate price commitments with individual exporters, which – it should be emphasized here – is allowed by the rules of both the European Union and the World Trade Organisation.
The final value of the countervailing duties as of their entry into force is as follows. The three companies, as was the case before, were separated and, according to the Commission, appropriate countervailing duties were imposed on them: BYD – 17%, Geely – 18.8% and SAIC – 35.3%. Other companies that have expressed their willingness to cooperate with the Commission will be subject to tariffs of 20.7%. On the other hand, those that have not entered into such cooperation must take into account customs duties, the value of which reaches 35.3%, the same as in the case of SAIC. In addition, the US brand Tesla will be charged a duty of 7.8% following a case-by-case examination, supported by a reasoned request. Provisional tariffs, introduced on 4 July this year, are being phased out and will no longer be collected.
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