EU Trade Commissioner and China's Wang Meet to address EV tariff concerns

The European Union and China agreed Thursday to intensify discussions as the two sides seek ways to avert looming tariffs on electric cars ahead of a deadline that’s only days away.

Valdis Dombrovskis, the bloc’s trade commissioner said that he and Commerce Minister Wang Wentao had a productive meeting and planned to continue talks “without prejudice to the EU investigation and its deadlines."

The EU made clear to China that it will continue its formal investigation into unfair subsidies for EVs made in China, but “the two sides agreed to take a renewed look at price undertakings," according to Olof Gill, a spokesperson for the European Commission.

The Chinese Commerce Ministry, in a statement, said that both sides will continue to discuss a possible price commitment agreement and are committed to reaching a mutual acceptable solution. The ministry added that it would respond to any tariffs with “necessary measures."

China had previously offered the bloc a commitment to price undertakings, which are a mechanism to used to control prices and volumes of exports to avoid tariffs, but the EU had said the solutions offered weren’t acceptable.

Dombrovskis told Wang that the EU probe “is bound by the WTO legal deadlines," Gill said, referring to the World Trade Organization.

Wang also held separate talks a day earlier with carmakers in Brussels. The EU was planning to vote Sept. 25 on whether to impose the tariffs, though that date could slip slightly.

Wang is on a whirlwind tour of Europe, trying to convince enough nations to vote against the tariffs by visiting Germany, Italy, and now Belgium, where the EU is headquartered. The EU has proposed imposing tariffs on China-made EVs of up to nearly 50%.

The vote later this month would pave the way for the duties to kick in from November for five years unless a qualified majority — 15 member states representing 65% of the the bloc’s population — opposes the move. The EU has frequently said that any solution needs to be in line with WTO rules and address the impact of China’s subsidies, a message that Dombrovskis repeated on Thursday, according to Gill.

At stake for the EU are the tens of thousands of jobs and economic output from the auto and supplier industry that’s facing a profound impact from electrification. Tariffs may give European carmakers some breathing space from Chinese competitors ramping up a global expansion.

And for China, Europe is one of the most lucrative markets for its EV exports. Relatively unencumbered access will help Chinese manufacturers lift margins that have been eroded by a fierce competition at home. Around the talks, China is offering both a carrot of increased investment into car plants — in countries like Spain and Hungary — as well as wielding the stick of threatening tariffs on dairy, brandy and other products.

During his talks in Italy, Wang said the European Commission had shown no political will to resolve the dispute, according to a report from Chinese media Caixin. Italy supports the imposition of tariffs, according to its foreign minister, Antonio Tajani.

However, Spain and Germany have in recent weeks raised the stakes by expressing opposition to the tariffs. Earlier this month the Spanish leader said the EU should re-examine its plan to impose additional levies, underlining simmering EU divisions over the trade measure.

The German government’s spokesman, Steffen Hebestreit then said that Chancellor Olaf Scholz had already made clear his skeptical views on the issue and welcomed the comments from Pedro Sanchez, Spain’s prime minister.

In a statement published after a meeting with Wang in Berlin this week, German Economy Minister Robert Habeck urged the EU and China to find a political solution in a dispute over Chinese-made electric vehicles and said a trade conflict should be avoided “at all costs."

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