Top trade officials from the European Union and China failed to reach an agreement in Brussels on Thursday to end the bitter dispute over electric vehicles.
However, the parties have promised to intensify talks to find a negotiated solution to the dispute, including a ‘new look at price agreements’.
A statement from the European Commission described the lengthy negotiations between EU Trade Commissioner Valdis Dombrovskis and Chinese Trade Minister Wang Wentao as “frank and constructive”.
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“Both sides reaffirmed their political will to continue and intensify efforts to find a mutually acceptable solution, which should be effective in addressing the problem, enforceable, verifiable and WTO compatible. The two sides agreed to reconsider price undertakings,” the commission’s report said.
Chinese Commerce Minister Wang Wentao. Photo: Reuters alt=Chinese Commerce Minister Wang Wentao. Photo: Reuters>
This could mean that China commits to setting a minimum price for electric vehicles exported to the EU, in response to EU concerns that these vehicles undermine local competition.
The Commission has previously rejected proposals from individual companies to introduce such measures, considering them not far-reaching enough.
The company said the proposals would not have the same impact as tariffs, which it said should be the case in a negotiated outcome.
According to EU sources, the previous deadline for price commitments has been extended and late applications are now being considered.
This is possible under urgent conditions in the Commission’s regulations, which allow for the previously prescribed deadline of 24 August to be extended under “exceptional circumstances”.
A report on the talks by China’s Ministry of Commerce said both sides “clearly expressed their political will to resolve the differences through negotiations.”
However, it was warned that “if the European side continues to insist on implementing unreasonable tax measures, China will respond forcefully as necessary to protect the legitimate rights and interests of enterprises”.
Wang did not make a formal offer on Thursday, but one is expected soon through business channels. Talks are moving to a technical level in an attempt to iron out details, but EU insiders remain skeptical that Beijing can put together a bid that meets the right criteria.
European Commissioner for Economy and Productivity Valdis Dombrovskis. Photo: EPA-EFE alt=European Commissioner for Economy and Productivity Valdis Dombrovskis. Photo: EPA-EFE>
Nevertheless, productive talks could give the commission some breathing space amid the suffocating pressure from some member states to strike a deal with China. The ball is firmly in Beijing’s court to come up with a deal that meets the commission’s very specific criteria.
The commission stressed that it would continue with the “formal process under the electric vehicle investigation, which is bound by WTO legal deadlines”, meaning it will proceed with plans to impose tariffs if no agreement is reached.
The negotiations were aimed at reaching a solution to an increasingly urgent trade dispute over China’s subsidies to electric vehicle manufacturers.
Following an investigation launched last year, the European Commission plans to impose countervailing duties on Chinese EVs imported into the EU. The tariffs range from 7 percent for a Tesla to 35.3 percent for those from companies such as Chinese state-owned giant SAIC. These would come on top of the EU’s basic 10 percent tariff on all EV imports.
China strongly denies the EU’s claim that it has subsidized any stage of the electric vehicle supply chain. China argues that its companies are competitive because of their competence and innovation.
If no deal is reached, the EU will impose the tariffs for a period of five years, before October 30.
Such a move would be determined in a vote of EU member states due to take place before that date, and its outcome looks increasingly tense.
To stop the introduction of such levies, 15 of the EU’s 27 member states (representing 65 percent of the bloc’s population) would have to vote against.
The vote was scheduled for a meeting of trade diplomats on September 25, but has been postponed.
Insiders said some capitals had not yet taken a position. The high visibility of the issue means the decision is likely to be taken at the prime ministerial level in many countries.
The Commission is expected to send a regulation to member states for consideration next week. This regulation will contain the final rates on which member states will vote.
Major members such as France and Italy have pledged their full support for the tariffs, meaning a blocking majority is unlikely. But in the run-up to the vote, Beijing has been pressuring EU capitals to oppose the tariffs, deploying a series of carrots and sticks.
During his visits to Italy and Germany this week, Wang warned ministers that a trade conflict would be damaging to their economies.
Germany has been receptive: after a meeting with Wang earlier this week, Vice Chancellor Robert Habeck said a trade war must be avoided “at all costs.”
As Germany’s largest car companies pressure their government to oppose the tariffs, Chancellor Olaf Scholz’s office lobbying in other EU capitals vote against.
Spanish Prime Minister Pedro Sanchez, previously a proponent of trade barriers, spoke out against the dangers of a trade war during a trip to China this month, where he secured $1 billion in Chinese investment in a hydrogen electrolysis plant.
Spanish Prime Minister Pedro Sanchez with Chinese President Xi Jinping in Beijing on September 9. Photo: La Moncloa/AFP alt=Spanish Prime Minister Pedro Sanchez with Chinese President Xi Jinping in Beijing on September 9. Photo: La Moncloa/AFP>
“We all have to rethink it, not only the member states but also the Commission,” Sanchez said after a meeting with Chinese President Xi Jinping and after Beijing launched a retaliatory investigation into EU pork that would hit Spain disproportionately hard.
China is also threatening the European auto industry and has launched an investigation into European exports of brandy and dairy products.
According to Dombrovskis, these investigations were “unjustified, based on questionable allegations and lacked sufficient evidence”.
This article originally appeared in the South China Morning Post (SCMP)the most authoritative voice covering China and Asia for over a century. For more SCMP stories, explore the SCMP app or visit the SCMP’s Facebook And Twitter pages. Copyright © 2024 South China Morning Post Publishers Ltd. All rights reserved.
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