EU ‘Confident’ EV Tariffs in Line With WTO Rules Following Beijing’s Complaint

BYD electric cars for export waiting to be loaded on the "BYD Explorer NO.1," a domestically manufactured vessel intended to export Chinese automobiles, at Yantai port, in eastern China's Shandong Province, on Jan. 10, 2024. (STR/AFP via Getty Images)

Brussels said it’s “confident” that the tariffs it has imposed on Chinese electric vehicles (EVs) are in compliance with global trade rules following a complaint from Beijing.

The Chinese regime on Aug. 10 requested a consultation with the World Trade Organization (WTO) over the European Union’s anti-subsidy tariffs on Chinese EVs.

In response, the European Commission said the development won’t affect its ongoing probe into Chinese subsidies, which led to the interim decision to slap tariffs on Chinese EVs.

Last month, Brussels announced that battery EV (BEV) imports manufactured in China would be subject to provisional tariffs between 17.4 percent and 37.6 percent.

The move came after an eight-month investigation that found “the BEV value chain in China benefits from unfair subsidisation, which is causing a threat of economic injury to EU BEV producers.”

The provisional tariffs affect Chinese brands such as BYD, which is subject to a tariff rate of 17.4 percent, as well as Western brands that are manufactured in China.

The commission said at the time there was an ongoing negotiation with the Chinese regime with a goal of reaching a WTO-compatible solution.

On Friday, a spokesperson for China’s Ministry of Commerce confirmed that Beijing was triggering the WTO’s arbitration mechanisms over the EU’s anti-subsidy measures.

According to a transcript published by the department, the spokesperson said the EU’s interim findings “lack basis in fact and the law, seriously violate WTO rules, and undermines the global response to climate change.”

In response, a spokesperson for the European Commission said the bloc believes its measures are in line with WTO rules.

“The Commission is confident of the WTO-compatibility of its investigation and provisional measures,” the spokesperson said.

“This request for WTO consultations does not affect the timeline of the anti-subsidy investigation, which in the meantime continues.”

The European Commission is expected to conclude its anti-subsidy investigation with final decisions accounted for by November.

Due in part to increases in government subsidies, China has become a major supplier of EV vehicles and batteries in recent years. Nearly 80 percent of all lithium-ion batteries for electric vehicles globally came from China in 2021 and, by 2023, nearly one in five EVs sold in Europe had been manufactured in China.

The EU’s provisional tariffs came after President Joe Biden ordered the quadrupling of the tariff rate on Chinese EVs from 25 percent to 100 percent in May.

Meanwhile, the Canadian government has recently concluded a 30-day public consultation on plans to impose tariffs on Chinese EVs in a bid to protect Canadian jobs.

Launching the consultation in June, Deputy Prime Minister Chrystia Freeland accused Beijing of having an “intentional state-directed policy” of over-producing EVs, which has been undermining Canada’s EV sector. She also said these Chinese vehicles are manufactured with poor labor and environmental standards.

Meanwhile, Chinese manufacturers of EVs and EV batteries are seeking to circumvent tariffs by setting up shop overseas, with BYD signing a $1 billion (£770 million) investment deal last month on building a factory in Turkey, which is a part of the EU Customs Union and enjoys a zero percent tariff on vehicle exports to the UK.

If the company manages to avoid paying tariffs, it would make it very difficult for British manufacturers to compete with their Chinese counterparts, an expert told The Epoch Times at the time.

However, to be eligible for lower tariffs by setting up factories in Turkey, or elsewhere, exported products will have to meet the rules of origin, meaning a certain portion of the vehicle would have to be manufactured in those countries instead of assembled with made-in-China parts.

Matthew Horwood and Reuters contributed to this report.