The top trade officials from the European Union and China failed to reach a deal on ending a bitter dispute over electric vehicles during talks in Brussels on Thursday.
However, the sides committed to intensify talks towards finding a negotiated solution to the quarrel, including taking a “renewed look at price undertakings”.
A European Commission readout described lengthy negotiations between EU trade commissioner Valdis Dombrovskis and Chinese Commerce Minister Wang Wentao as “frank and constructive”.
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“Both sides reaffirmed their political will to pursue and intensify efforts in finding a mutually agreeable solution, which would need to be effective in addressing the problem, enforceable, monitorable, as well as WTO-compatible. The two sides agreed to take a renewed look at price undertakings,” the commission’s account read.
Chinese Commerce Minister Wang Wentao. Photo: Reuters alt=Chinese Commerce Minister Wang Wentao. Photo: Reuters>
This could mean a commitment from China to place a minimum price on electric vehicles exported to the EU to address the bloc’s concerns that the vehicles are undercutting local competition.
The commission has previously rejected offers from individual companies to introduce such measures, which were not seen to go far enough.
It has said the proposals would not have replicated the impact of tariffs, which is what it says a negotiated outcome must deliver.
A previous deadline for price undertakings has been extended and late submissions will now be considered, according to EU sources.
This is possible under emergency terms in the commission’s regulations that allow for the previously prescribed deadline of August 24 to be extended under “exceptional circumstances”.
A Chinese commerce ministry account of the talks said that both sides had “clearly expressed their political will to resolve differences through consultations”.
However, it warned that “if the European side insists on implementing unreasonable tax measures, China will firmly respond as necessary to safeguard the legitimate rights and interests of enterprises”.
Wang made no formal offer on Thursday, but that is expected soon through business channels. Talks will be moved down to a technical level in an effort to iron out details, but EU insiders remain sceptical as to whether Beijing can put together an offer that ticks the right boxes.
European Commissioner for Economy and Productivity Valdis Dombrovskis. Photo: EPA-EFE alt=European Commissioner for Economy and Productivity Valdis Dombrovskis. Photo: EPA-EFE>
Nonetheless, productive talks may buy the commission some breathing space amid stifling pressure from some member states to strike a deal with China. The ball is firmly in Beijing’s court to come up with a deal that would satisfy the commission’s very specific criteria.
The commission stressed that it would continue with its “formal process under the EVs investigation that is bound by the WTO legal deadlines”, meaning it will move ahead with plans to impose tariffs should a deal not be reached.
The negotiations were aimed at reaching a solution to an increasingly dramatic trade dispute over China’s subsidies to its electric vehicle manufacturers.
After an investigation begun last year, the European Commission is planning to impose countervailing duties on Chinese EVs imported into the EU. The rate of duty ranges from 7 per cent for a Tesla to 35.3 per cent for those made by companies including the Chinese state-owned giant SAIC. These would come on top of the EU’s baseline 10 per cent tariff on all EV imports.
China has firmly denied the EU assertion that it has subsidised every stage of the EV supply chain and claims its companies are competitive because of their prowess and innovation.
If no deal is reached, the EU will move to impose the tariffs for a five-year period before October 30.
Such a move would be determined in a vote of EU member states that must be held before that date, and the outcome is looking increasingly tight.
To stop the imposition of such duties, 15 of the EU’s 27 member states – accounting for 65 per cent of the bloc’s population – would have to vote against them.
The vote was on the agenda for a meeting of trade diplomats on September 25 but has been postponed.
Insiders said some capitals had yet to decide on a position. The issue’s high profile means the decision will likely be raised to the level of prime minister in many countries.
The commission is expected to send a regulation to member states to consider next week, which will contain the final tariff rates on which they will vote.
Big members like France and Italy have pledged full support for the duties, meaning a blocking majority is unlikely. But in the run-up to the vote, Beijing has been leaning on EU capitals to oppose the duties, deploying a range of carrots and sticks.
This week during trips to Italy and Germany, Wang warned ministers that a trade dispute would harm their economies.
Germany has proven receptive: after meeting with Wang earlier this week, Vice-Chancellor Robert Habeck said that a trade war should be avoided “at all costs”.
With Germany’s biggest car companies leaning on their government to oppose the duties, Chancellor Olaf Scholz’s office has been lobbying other EU capitals to vote against.
Spanish Prime Minister Pedro Sanchez, previously a supporter of duties, spoke against the dangers of a trade war during a trip to China this month, where he secured US$1 billion in Chinese investment in a hydrogen electrolyser plant.
Spanish Prime Minister Pedro Sanchez with Chinese President Xi Jinping in Beijing on September 9. Photo: La Moncloa/AFP alt=Spanish Prime Minister Pedro Sanchez with Chinese President Xi Jinping in Beijing on September 9. Photo: La Moncloa/AFP>
“We need to reconsider – all of us, not only member states but also the commission,” Sanchez said after meeting Chinese President Xi Jinping, and after Beijing launched a retaliatory probe into EU pork that would disproportionately affect Spain.
China has also threatened the EU car industry and started investigations into European brandy and dairy exports.
Dombrovskis said that these investigations were “unwarranted are based on questionable allegations, and lack sufficient evidence”.
This article originally appeared in the South China Morning Post (SCMP), the most authoritative voice reporting on China and Asia for more than a century. For more SCMP stories, please explore the SCMP app or visit the SCMP’s Facebook and Twitter pages. Copyright © 2024 South China Morning Post Publishers Ltd. All rights reserved.
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