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EXPLAINER-What happens next in the EU investigation into China-made EVs?
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EXPLAINER-What happens next in the EU investigation into China-made EVs?
Aug 20, 2024 8:08 AM

(Updates to add details throughout of the EU's draft findings)

By Philip Blenkinsop

BRUSSELS, Aug 20 (Reuters) - The European Commission

published on Tuesday the draft findings of its high-profile

investigation into alleged subsidies for imports of Chinese-made

electric vehicles, which included some revisions to proposed

punitive tariffs.

WHAT IS THE DRAFT DEFINITIVE DECISION?

The Commission published what it said was its draft

definitive tariff decision. This could become the EU's final

measure on Chinese-made EVs once its investigation is concluded

in about two months.

It follows the provisional stage of the investigation which

launched in October 2023.

This draft decision reflects the comments received from

interested parties such as EV makers on the provisional duties

set on July 5. It also concludes some investigative steps that

had not been finalised at the provisional stage.

The Commission will confirm whether it will apply final

duties, known as definitive duties, by Oct. 30.

WHAT IS THAT LATEST DECISION?

The main new element was the big cut in Tesla's

extra tariff to 9% from a provisional 20.8% after the U.S. EV

maker requested the Commission calculate a separate individual

rate for it.

Volkswagen's SEAT subsidiary will also receive a

lower tariff on its Cupra Tavascan, produced by VW's

majority-owned joint venture in China. That means it was among

the companies classed as cooperating with the EU probe.

BMW's joint venture in China which produces the

electric Mini will also get a lower tariff.

The Commission said some Chinese companies in JVs with EU

automakers may receive lower planned punitive duties on

Chinese-made EV imports.

It also decided not to retroactively collect countervailing

duties.

WHAT HAPPENS NEXT?

Interested parties such as China and EV producers now have

10 days - until Aug. 30 - to comment and request hearings on the

final disclosure.

The Commission already visited more than 100 sites of

automakers in China and Europe and done the bulk of its

investigation.

As an alternative to duties, exporters can commit to selling

their products at or above a minimum price. Chinese exporters

agreed such an undertaking in the case of solar panels a decade

ago. However, cars are not commodities, so it is hard to see how

a minimum price could be applied.

WHO DECIDES?

The proposed final duties will be subject to a vote by the

EU's 27 states. The Commission's proposal will be implemented

unless a qualified majority of 15 EU members representing 65% of

the EU population vote against.

Definitive duties would be confirmed by Oct. 30 and

typically apply for five years.

Until then, Brussels and Beijing could still thrash out a

compromise to avert or soften tariffs.

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 itself 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 challenge the measures at the European Court

of Justice. China has launched a challenge at the World Trade

Organization. Both legal paths can take well over a year.

The EU Commission has said it is confident its investigation

and measures are compatible with WTO rules.

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