The dispute on electric batteries trigger a ripple effect in EU-China relation

Said and done. The Chinese government just announced that an appeal was filed with the World Trade Organization over the provisional tariffs imposed by the European Commission on imported battery electric vehicles. Beijing has long threatened to proceed in this way, basing this action on the allegation that the European counterpart “seriously violets WTO rules and undermines the overall situation of global cooperation in addressing climate change.”

In a nine-month investigation, the European Commission found that the battery value chain in China benefits from unfair subsidization, causing “a threat of economic injury to EU producers. The individual duties applied to the three sampled Chinese producers amount to 17.4% for BYD, 19.9% for Geely, and 37.6% for SAIC. Other producers in China, which cooperated in the investigation but were not sampled, are subject to the 20.8% weighted average duty. The duty for other non-cooperating companies is 37.6%. Provisional countervailing duties are secured by a guarantee that may be collected under certain circumstances only when a decision has been made to impose definitive duties.

According to the European Commission, there is a risk that the growing presence of Chinese electric vehicles could hold back the development of the European industry, with losses of 2.5 million direct jobs and 10.3 million indirect jobs without EU intervention. The probe alleges a recent surge in imports of EVs, at prices reportedly 20% lower than those of similar EU products.

Within four months, the European Commission is required to submit a proposal to impose definitive duties based on the dialogue with the Chinese counterpart. Member States are later invited to confirm the final duties with a qualified majority vote. “Duties are not a goal in themselves; they are a means to correct an unjust situation. We want to arrive at a solution,” the Vice President of the European Commission for Trade stated.

China immediately responded with an anti-dumping investigation into imported pork-related products from the EU. Products under investigation include fresh and frozen pork, pork offal, pork fat without lean meat, intestines, bladders, and pork stomachs. The judicial initiative, launched in January at the request of the China Alcoholic Drinks Association on behalf of the domestic industry against brandy imports from the EU, opens a new front in the dispute.

On August 16th, new duties will be applied after probes into dumping practices on biodiesel from China traded onto the EU market.

The European Commission decided to impose duties of 12.8 percent for the EcoCeres Group, 36.4 percent for the Jiaao Group, and 25.4 percent for the Zhuoyue Group. Other producers that cooperated in the investigation will be subject to a 23.7 percent duty, while all other companies that did not cooperate 36.4 percent.

Brussels estimates that the biodiesel market in the EU is worth €31 billion annually, providing a renewable alternative to fossil fuels in the transport sector. According to data released by the European Biodiesel Board (Ebb), which filed the complaint, Chinese companies exported 1.8 million tons of biodiesel to the EU, accounting for 90 percent of all Chinese biodiesel exports. Beijing’s dumping practices with the massive entry of Chinese biodiesel into the EU, the Ebb attacked, are having a “devastating effect on European production,” contributing to the “difficulties” of the products.