(Bloomberg) — The European Union said Tuesday it plans to impose a 9% tariff on Teslas imported from China, informing automakers of its draft decision to proceed with permanent import duties on electric vehicles shipped from the country.
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As the union tries to counter Beijing’s subsidies to industry, officials said they would continue to consult with manufacturers over the draft decision ahead of a vote in member states on the tariffs that are scheduled to take effect in November.
The proposed tariffs have been revised slightly, with MG maker SAIC Motor Corp., Volvo Car AB parent Geely and BYD Co. each facing additional duties of 36.3%, 19.3% and 17% respectively.
Other cooperating companies that were not sampled would be hit with a 21.3% tariff, while all other non-cooperating companies would be set at 36.3%. The tariffs would be imposed on top of the existing 10% duties currently imposed on exporters from China.
For Tesla Inc., the 9% tariff is relatively welcome news because it is lower than the rate faced by other manufacturers. EU officials said one factor behind the calculation is that Beijing appears to be providing fewer subsidies to foreign companies.
The bulk of the benefits Tesla received came from the supply of batteries below market value, EU officials said. Other schemes the company benefited from included land-use rights, income tax relief and subsidies in various forms, including a national subsidy that all exporting manufacturers received, the officials added.
Parties now have 10 days, until 30 August, to comment and request hearings on the proposal. If a qualified majority of member states do not block the measures in a binding vote, the European Commission will publish a final regulation on the tariffs by 30 October. The tariffs would then remain in place for five years, renewable after a review.
Brussels and Beijing have held talks in recent months to explore whether an alternative solution can be found. The EU has said any such solution would have to comply with World Trade Organization rules and address the underlying issue of subsidies.
China claims the measures are protectionist and has threatened its own tariffs on a range of sectors including pork, large-engine cars and spirits. Beijing is also challenging the measures at the WTO.
Several member states, including Germany and Hungary, have opposed the tariffs, but a blocking majority is needed to stop the levies.
The EU also said it plans to grant a lower tariff to joint ventures that were not exporting during the investigation period. Those companies would receive the same tariff as the cooperating party in the venture.
The EU had demanded that the targeted companies provide guarantees for the provisional tariffs, but officials said the bloc would not impose them retroactively. The tariffs could still change before they become final, officials said.
–With assistance from Craig Trudell.
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