Germany to abstain in EU vote on provisional tariffs for China-made EVs

Germany is set to abstain in Monday's vote by European Union member states on imposing provisional tariffs on China-made electric vehicles, sources told Reuters on Friday, in the first test of support for Brussels' landmark trade case.

The provisional tariffs of up to 37.6 per cent on EVs imported from China do not require the member states' support, but the final tariffs could be blocked if a qualified majority of the EU's 27 members is opposed.

An abstention in this first stage effectively means backing the Commission as it continues negotiations with Beijing over the EU's largest trade case yet.

The EU's largest economy will abstain because the anti-subsidy investigation continues and negotiations between the EU Commission and the Chinese government are ongoing, the sources said. They declined to be named because the decision is confidential.

Germany will abstain in the spirit of "critical solidarity" with the EU Commission, one of the sources said. German carmakers which made a third of their sales last year in China, oppose the tariffs. They worry about retaliation measures and fear a trade conflict with the country's second most important trading partner.

France has been among the firmest backers of the case, while Hungary has condemned it. Other members have wavered about how to vote, the first official test of support for the Commission's tariff move. The EU initiated the probe without an industry complaint, the first such trade case of this kind.

Asked late on Friday about the planned abstention, Chancellor Olaf Scholz said Germany expected the EU executive would succeed in reaching an agreement with China on EVs, and that an agreement would be good for Europe's car industry. He declined to confirm how the country would vote.

"These are globally competitive vehicles that have nothing to fear from competition," he told journalists after a meeting with Japan's premier. “But we must always make sure the conditions are fair on all sides."

First test

This first vote which is made in writing and confidential is not binding. At the provisional stage, the Commission has full power to impose duties, although it consults EU members and is supposed to take their positions into account.

This will be followed by a final vote at the end of the investigation, when the Commission can propose definitive duties, normally applying for five years.

The Commission says duties are needed to counter cheap loans, land and raw materials and other subsidies and the goal is a level playing field, not shutting Chinese car makers out, as the United States' planned 100 per cent tariff is likely to do.

Its proposal could be blocked if a qualified majority of the European Union's 27 members is opposed. A qualified majority needs 15 EU members representing 65 per cent of the EU population to be in favour.

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