By Philip Blenkinsop
BRUSSELS (Reuters) – France, Greece, Italy and Poland will vote on Friday in favor of tariffs of up to 45% on imports of electric vehicles (EVs) made in China, sources said, enough to push back the EU’s highest-profile trade deal. measures, risking potential retaliation from Beijing.
The European Commission, which is conducting an anti-subsidy investigation into EVs made in China, has submitted its proposal for final tariffs to the 27 EU member states for a vote expected on Friday.
The support is an important boost for Brussels as it pursues one of its biggest trade cases. It is unclear how the region’s top economy and leading carmaker, Germany, will vote.
Under EU rules, the Commission can impose tariffs for the next five years unless a qualified majority of 15 EU countries representing 65% of the EU population votes against the plan.
France, Greece, Italy and Poland will vote, officials and sources in those countries told Reuters. Together, they represent 39% of the EU population.
Commission President Ursula von der Leyen, who launched the investigation a year ago, said the EU must protect itself from a potential flood of cheap Chinese EV imports that benefit from state subsidies.
The commission said EV registrations built in China will increase from 3.5% of the EU market in 2020 to 27.2% in the second quarter of 2024 and Chinese brands from 1.9% to 14.1%. China’s spare production capacity of 3 million EVs per year, which must be exported, is twice the size of the EU market, it said on Tuesday.
The EU car industry has largely opposed the tariffs, particularly German carmakers, which rely on China for almost a third of their sales.
In a move seen as retaliation for Brussels’ investigation into EVs, Beijing this year launched its own probe into imports of EU brandy, milk and pork products.
If tariffs are imposed, Chinese EV makers will have to decide whether to absorb them or raise prices to cover billions of dollars in new costs across Europe’s borders as demand at home falls. The prospect of duties has prompted some Chinese automakers to invest in factories in Europe, despite higher labor and manufacturing costs.
CHINA’S “UNBEARABLE” SUBSIDIES
French President Emmanuel Macron said on Wednesday China’s subsidy levels were “unbearable”.
“In general, we need to protect a level playing field in all sectors of our industry,” he said in Berlin.
The Czech industry and trade ministry, while refusing to say how it will vote, said it took many of the Commission’s conclusions on “China’s unfair practices” and noted that the US, Canada, Turkey and Brazil have taken action.
The position of Spain, which had previously been a supporter of the tariffs, was unclear after Prime Minister Pedro Sanchez said on a visit to China in September that the EU should reconsider its position.
German Chancellor Olaf Scholz said on Wednesday that talks with China should continue, but that his country, which abstained from voting on the matter in July, could do so again because of differences of opinion within the three-party government.
“A trade war with China will do us more harm than good for major European industries and important sectors in Germany,” Finance Minister Christian Lindner said on Wednesday.
Volkswagen (ETR: ) has urged Germany to vote against the tariffs, arguing they will not increase competitiveness.
The Commission can push the tariffs with the support of only four countries. However, the EU executive can submit an amended proposal if it wants to secure greater support.
EU executives have said they want to continue negotiating alternatives to tariffs with China and may re-examine prices – including minimum import prices and usually volume caps – before rejecting those offered by Chinese companies.
One option in the discussion is the minimum import prices calculated using criteria such as range, battery performance and length of electric vehicle, along with whether it is two or four-wheel drive, a source familiar with the matter said.
An alternative is a commitment to investment in the EU, with quotas for the transition period.
Those rates range from 7.8% for Tesla (NASDAQ: ) to 35.3% for SAIC and other companies deemed uncooperative with EU investigations. This rate is on top of the EU’s standard 10% import duty on cars.