Price agreement: The Ebro S700 SUV at a launch of EV Motors in Barcelona, Spain. The deal, if finalised, could satisfy the EU’s demands for shielding its local automotive sector and do away with the steep tariffs on Chinese EV imports. — Bloomberg
BEIJING: The prospect of China and the European Union (EU) nearing a solution on the continental block’s imposition of extra tariffs on Chinese-made electric vehicles (EVs) will provide a much-needed buffer to avoid the escalation of trade tensions between the two economic powerhouses, analysts say.
China and the EU meeting each other halfway on the tariff issue would not only benefit the EV industry on both sides, but also contribute to a broader bilateral economic relationship, they added.
Bernd Lange, chairman of the Committee on International Trade of the European Parliament, told German broadcaster n-tv last Friday that Brussels and Beijing are close to reaching a deal that would see China commit to offering EVs in the EU at a minimum price, although he did not provide further details on the specifics of the arrangement.
Amid simmering tensions over allegations of the so-called unfair subsidies in China’s EV industry, the EU completed its probe on Oct 29, placing additional tariffs of up to 35.3% on Chinese EV imports for five years, on top of the standard 10% import duty.
Despite the tariff imposition, Chinese and EU technical teams engaged in five rounds of discussions in Beijing from Nov 2 to 7, as well as video talks in the following week, aimed at reaching a potential price agreement.
Under this arrangement, China would agree to an export price and volume for its EVs in exchange for the EU removing the tariff hikes.
A source familiar with the matter said earlier this month that China and the EU reached a “technical consensus” after the talks, particularly on the framework for the price agreement and its implementation mechanism.
Building on the progress, both parties expressed a willingness to focus on negotiating issues related to their core interests and reach an agreement, the source said.
Neither the European Commission, the EU’s executive arm, nor China’s Commerce Ministry have commented on Lange’s remarks.
The deal, if finalised, could satisfy the EU’s demands for shielding its local automotive sector, while preventing the levying of steep tariffs on Chinese EV imports, said Sang Baichuan, dean of the University of International Business and Economics’ Institute of International Economy.
The price agreement could provide temporary relief for European carmakers, but Sang noted that building a local value chain that could truly support the sustainable growth of the EU’s electric vehicle industry is a long-term endeavour.
Simply suppressing supply from China is not the way out, said Sang, who added that European companies should evaluate their competition and collaboration with Chinese companies in a more calm and rational manner.
According to a report published in April by the International Energy Agency, China currently dominates the battery supply chain, with nearly 85% of global battery cell production capacity.
“The price undertaking will ultimately revert to market-based pricing in the long run,” Sang said, adding that this is expected to prompt Chinese automakers to re-evaluate their product positioning, cost structures and various aspects of their value chains.
Cui Hongjian, director of Beijing Foreign Studies University’s Centre for the European Union and Regional Development Studies, said the EU official’s statement indicates a push within the group for arriving at an early consensus with China.
Given the economic challenges confronting Europe and the opposition from multiple member states, it is prudent for the EU to steer clear of escalating trade tensions, which could potentially inflict more adverse repercussions on its economy, Cui added. — China Daily/ANN
