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EXPLAINER-What happens next as China-made EVs investigated by EU?
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EXPLAINER-What happens next as China-made EVs investigated by EU?
Oct 3, 2024 5:04 AM

BRUSSELS, Oct 3 (Reuters) - European Union members will

vote on Friday on a European Commission proposal to impose

tariffs on Chinese-made electric vehicles (EVs).

The Commission last revised the tariff rates in September,

imposing levels from 7.8% for Tesla to 35.3% for SAIC and other

producers deemed not to have cooperated with the EU's

anti-subsidy investigation. These would be come on top of the

EU's standard 10% car import duty.

EU VOTE

The proposed final or "definitive" duties will be subject to

a vote by the EU's 27 states. The Commission's proposal can be

implemented unless a qualified majority of 15 EU members,

representing 65% of the EU population vote against. It is a very

high hurdle.

Reuters reported on Wednesday that France, Greece, Italy and

Poland will vote in favour, which would be enough to push

through the EU's highest profile trade measures.

The Commission can still submit an amended proposal at a

later stage, which it might do to secure greater backing.

In any case, a decision on tariffs has to be made by Oct.

30, with their imposition the following day. Definitive tariffs

typically apply for five years.

If imposed, definitive tariffs would mean provisional duties

dating back to July would also have to be paid. Until the end of

the EU investigation, companies can cover these with a bank

guarantee.

CONTINUED TALKS WITH BEIJING

The European Commission has said it is willing to continue

negotiating an alternative to tariffs with China even after

tariffs are imposed.

The EU executive said last month it could re-examine a price

undertaking - involving minimum import prices and typically

volume caps - having previously rejected those Chinese companies

have offered.

One option under negotiation is a matrix of minimum import

prices calculated using criteria such as the range, battery

performance and length of the electric vehicle, along with

whether it is two- or four-wheel drive, a source familiar with

the matter said.

The Commission has said any alternative must be in line with

World Trade Organization (WTO) rules, adequate to remove the

injury due to subsidies and enforceable.

CHINESE RETALIATION

In moves seen as retaliation, China has launched

anti-dumping investigations into EU exports of pork and brandy

and an anti-subsidy probe into EU dairy products, but it has yet

to impose any measures.

The EU launched a challenge at the WTO last week into the

dairy probe.

China's Commerce Ministry has also met with automakers and

industry associations to discuss raising import duties on

large-engined gasoline vehicles, which would hit German

producers hardest.

Germany's exports of vehicles with engines of 2.5 litres or

larger to China were worth $1.2 billion last year, Chinese

customs data shows.

WHAT HAPPENS AFTER THE INVESTIGATION?

Any company not in the sample group of BYD,

Geely and SAIC that wishes to have its

own individual duty can ask for an "accelerated review" just

after the imposition of definitive measures. Such a review

should last a maximum of nine months.

The Commission can also carry out an "interim review" after

a year has elapsed if the measures are no longer necessary or if

they are not sufficient to counteract subsidies.

The Commission often looks into whether producers are

evading duties via exports of parts for assembly elsewhere. For

the EU, such circumvention exists if 60% or more of the value of

parts are imported from the country subject to duties and if the

value added in the assembly is no more than 25%.

Companies can dispute the measures at the European Court of

Justice. China has already launched a challenge at the WTO. Both

legal paths can take well over a year.

The Commission has said it is confident its investigation

and measures are compatible with WTO rules.

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