China and the European Union have agreed to initiate discussions on the planned imposition of tariffs on Chinese-made electric vehicles (EVs) imported into the European market, senior officials from both sides announced on Saturday.
Germany’s Economy Minister Robert Habeck revealed that EU Commissioner Valdis Dombrovskis had informed him about the forthcoming negotiations with China. This announcement came shortly after China’s Commerce Ministry stated that its head, Wang Wentao, and Dombrovskis, Executive Vice President of the European Commission, had agreed to begin consultations over the EU’s anti-subsidy investigation into Chinese EVs.
“This is new and surprising in that it has not been possible to enter into a concrete negotiation timetable in the last few weeks,” Habeck said in Shanghai. He noted that while this is a significant first step, many more steps are required. “We are far from the end, but at least, it is a first step that was not possible before.”
Earlier on Saturday, Habeck emphasized that the European Union is open to discussions regarding EU tariffs on Chinese exports. “What I suggested to my Chinese partners today is that the doors are open for discussions and I hope that this message was heard,” he stated after meetings with Chinese officials in Beijing.
Habeck’s visit marks the first by a senior European official since Brussels proposed hefty duties on imports of Chinese-made electric vehicles to address what the EU perceives as excessive subsidies. He highlighted that there is still time for dialogue between the EU and China on tariff issues before the duties come into full effect in November. Habeck underscored the importance of open markets and a level playing field, noting that proven subsidies aimed at increasing export advantages are unacceptable.
Another point of contention between Beijing and Berlin is China’s support for Russia in its war in Ukraine. Habeck pointed out that Chinese trade with Russia increased by more than 40% last year, and he communicated to Chinese officials that this was negatively impacting their economic relationship. “Circumventions of the sanctions imposed on Russia are not acceptable,” he stated, adding that European-produced technical goods should not end up on the battlefield via other countries.
The EU’s provisional duties of up to 38.1% on imported Chinese EVs are set to take effect by July 4, with the investigation continuing until November 2. Definitive duties, typically lasting five years, could be imposed after the investigation concludes. “This opens a phase where negotiations are possible, discussions are important and dialog is needed,” Habeck said.
During earlier discussions in Beijing, Habeck emphasized that the proposed EU tariffs on Chinese goods are not punitive. “It is important to understand that these are not punitive tariffs,” he told Chinese officials during the first plenary session of a climate and transformation dialog. He explained that while countries like the United States, Brazil, and Turkey have used punitive tariffs, the EU operates differently. The European Commission had spent nine months examining whether Chinese companies unfairly benefited from subsidies. Any countervailing duty measure resulting from the EU review is not a punishment but rather compensation for the advantages granted to Chinese companies by Beijing.
In response, Zheng Shanjie, Chairman of China’s National Development and Reform Commission, vowed to protect Chinese companies. He added that proposed EU duties on Chinese-made EVs would be detrimental to both sides and expressed hope that Germany would demonstrate leadership within the EU and “do the correct thing.” Zheng denied accusations of unfair subsidies, asserting that the growth of China’s new energy industry results from comprehensive advantages in technology, market, and industry supply chains fostered by fierce competition. “The industry’s growth is the result of competition, rather than subsidies, let alone unfair competition,” Zheng said during the meeting.