EU, China to continue talks on extra tariffs

Vehicles for export are parked at a port in Lianyungang, Jiangsu province, in October 2023. (WANG CHUN/FOR CHINA DAILY)

The European Union and China will continue their negotiations this week seeking an alternative to the imposition of extra tariffs on electric vehicles, on the heels of the talks earlier this month in Beijing, which yielded some progress, according to the European Commission, the bloc's executive arm.

While the details of the potential agreement remain under wraps, a source close to the negotiations told China Daily on Tuesday that both Beijing and Brussels have demonstrated willingness and made efforts to find a mutually acceptable solution.

The dispute, which has been simmering for months, centers around unfounded allegations that China's so-called subsidies for its domestic EV industry have created an unfair playing field.

The European Commission concluded on Oct 29 its probe by imposing extra duties on imports of Chinese-made battery EVs of up to 35.3 percent for a period of five years, on top of the EU's standard 10 percent car import duty.

Though the tariff hikes have already come into force, Chinese and EU technical teams held five rounds of talks in Beijing from Nov 2 to 7, exploring the possibility of a price undertaking arrangement.

Under this arrangement, China would agree to a mutually acceptable export price and volume for its EVs in exchange for the EU refraining from imposing additional tariffs.

After a week of intensive discussions, both parties have been able to make headway in narrowing differences, particularly around the framework of the agreement and mechanisms for implementation, the source said.

On top of that, China has submitted various proposals of the price undertakings and related draft text to the EU in an effort to find a mutually acceptable solution at an early date, according to the source.

The EU's willingness to continue negotiations is an encouraging sign, suggesting that they are more inclined to find a resolution rather than escalate the trade tensions with China, said Feng Zhongping, director of the Chinese Academy of Social Sciences' Institute of European Studies.

The European Commission said in a Friday statement that: "There was technical progress on elements that will need to be addressed to ensure that a price undertaking would be equally effective and enforceable."

"Parties discussed constructively and in depth how to establish a minimum import price for such a complex product, as well as tools to monitor and enforce the undertaking," the commission said.

The two sides agreed that discussions at technical level will continue this week via video or other means, building on the progress made so far, the commission added.

That said, analysts warned that Brussels should steer clear of separate negotiations with automakers while in talks with the China Chamber of Commerce for Import and Export of Machinery and Electronic Products, which represents the 12 largest Chinese EV makers, including Geely, BYD and SAIC Motor.

SAIC Motor and Geely said on Oct 31 in their respective statements that they have never engaged in any separate negotiations with the EU on price undertakings.

The CCCME's price undertaking proposals, developed with the full authorization of different types of Chinese companies, reflect an industry-wide position. The EU's separate talks could only undermine the mutual trust between the two parties and disrupt the overall negotiation process, Feng said.

Jorge Toledo Albi ana, the bloc's ambassador to China, said on Friday at the 15th Caixin Summit in Beijing that finding a solution that would create a level playing field where European EV makers can compete with their Chinese counterparts would be an acceptable alternative to tariffs.

As the EU accelerates its push toward a green transformation, China's EV exports to Europe and the growing cooperation between the two economic powerhouses in the EV sector will play a crucial role in supporting the bloc's sustainability goals and driving the evolution of the automotive industry, said Sang Baichuan, dean of the Institute of International Economy at the University of International Business and Economic.