China says it has right to file WTO suit over EU electric car tariffs

China said Thursday it "reserves the right" to file a suit with the World Trade Organization over planned new EU tariffs on imports of its electric vehicles. The European Union warned this week it would slap additional tariffs of up to 38 percent on Chinese electric car imports from next month after an anti-subsidy probe.

The European Commission has proposed a provisional hike of tariffs on Chinese manufacturers: 17.4 percent for market major BYD, 20 percent for Geely and 38.1 percent for SAIC. The EU said the amount depended on the level of state subsidies received by the firms.

"China reserves the right to file a suit to the WTO and take all necessary measures to resolutely defend the rights and interests of Chinese companies," Beijing's commerce ministry spokesman He Yadong told a briefing. He condemned the move as lacking a "factual and legal basis".

"This action not only harms the legal rights and interests of the Chinese electric vehicle industry... but will also distort auto production and supply chains around the world, including in the European Union," He said. "The actions by the European side are suspected of violating WTO rules and are naked protectionist behaviour," he said.

The European Commission pointed on Wednesday to "unfair subsidisation" in China, which it said "is causing a threat of economic injury" to EU electric car makers. The tariffs will apply provisionally from July 4 and then definitively from November unless there is a qualified majority of EU states -- 15 countries representing at least 65 percent of the bloc's population -- voting against the move. The EU tariffs, while high, are lower than the 100 percent rate the United States imposed on Chinese electric cars from last month.

Countermeasures

European automakers face the threat of higher tariffs impacting their business in the Chinese market (File photo of a highway in Germany used for representational purposes.) (Bloomberg)

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European automakers face the threat of higher tariffs impacting their business in the Chinese market (File photo of a highway in Germany used for representational purposes.) (Bloomberg)

Europe's automotive sector is the jewel in its industrial crown -- boasting brands such as Mercedes and Ferrari -- but it faces threats including China's head start in the switch to electric.

Brussels wants to put the brakes on what it claims were unfair practices undercutting Europe's automakers, which face a 2035 deadline to phase out new sales of combustion engine cars. Germany, Hungary and Sweden previously expressed concerns about applying higher duties.

Chinese media ramped up threats that Beijing could target EU exports, including pork and dairy products, ahead of Wednesday's decision. China launched an anti-dumping investigation in January into brandy imported from the EU in a move seen as targeting France, which pushed for the commission's probe. A group representing French cognac producers said it was "deeply concerned" about possible Chinese retaliation.

China's commerce ministry did not offer specifics when asked on Thursday about countermeasures that might be taken.

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