China Challenges EU EVs Tariffs

· China called on the EU to enter consultation under Article 4 of the dispute settlement understanding to amicably resolve the dispute within one month from the date of filing the complaint at the WTO.

· EU provisional findings lack factual and legal support.

· The EU is expected to impose countervailing (anti-subsidy) duties to the tune of 37.6 percent on Chinese vehicles.

[ABS News Service/12.08.2024]

Geneva – China on Friday invoked World Trade Organization dispute settlement proceedings against the European Union over Brussels' proposed countervailing duties to the tune of 37.6 percent on Chinese electric cars, said people familiar with the developments.

The proposed countervailing duties could come into effect in October if approved by the EU member states.

As a first step, China called on the EU to enter consultation under Article 4 of the dispute settlement understanding to amicably resolve the dispute within one month from the date of filing the complaint at the WTO.

If the two sides are unable to reach an amicable agreement, China can call for establishing a dispute settlement panel to rule against the EU’s duties.

China’s Complaint

“To safeguard the legitimate interests of electric vehicle industry and to support global cooperation in green transition, China filed the consultations request and initiated WTO dispute settlement proceedings against the EU on 9 August,” according to a statement from China’s Ministry of Commerce.

China said: “The EU provisional findings lack factual and legal support, is contrary to WTO rules, and impede global cooperation to respond to climate change.”

“We urge the EU to immediately correct its measures, maintain economic cooperation between China and the EU, and preserve the stability of the global electric vehicle industrial and supply chain,” it said in an email sent by a Chinese official.

Coming close on the heels of China’s request for establishing dispute settlement panel against the United States against EV tax credits provisions of the Inflation Reduction Act, Beijing appears to be stepping up its fight against the unilateral and WTO-inconsistent measures being implemented on a rising scale, said people familiar with the developments.

However, at a time when the WTO’s enforcement function is almost dysfunctional since the spiking of the Appellate Body by the United States five years ago, it is not clear whether China would be able to secure an early ruling on the measures being put in place by the two trans-Atlantic trade elephants, said people who asked not to be identified.

European Union trade commissioner Valdis Dombrovskis recently said “it is clear that member states realize the need to protect the EU’s car industry because this risk of injury is there.”

“Chinese battery electric vehicle market share is growing very rapidly,” said Mr. Dombrovskis, adding that “subsidization is there”, according to a report in the Financial Times.

The EU trade commissioner went on to say: “so it’s certainly an issue that needs to be addressed.” The EU is expected to impose countervailing (anti-subsidy) duties to the tune of 37.6 percent on Chinese vehicles, according to news reports.