Iron arm

Electric cars, China appeals to the WTO against EU-made duties

According to Beijing, the Brussels decision 'lacks legal and factual basis and undermines cooperation' against climate change

9 August 2024

3' min read

China is appealing to the World Trade Organisation (WTO) against the European Union's decision to impose heavy tariffs on electric vehicles imported to the Old Continent from Beijing, exacerbating a dispute that is straining already difficult relations. According to a statement from the Ministry of Trade, the world's second largest economy has presented the case to the WTO dispute settlement mechanism. The aim is to 'safeguard the rights and development interests' of an electric vehicle industry that continues to grow at an incredible pace.

In July, for the first time, sales of battery electric (Bev) and plug-in (Phev) cars crossed the 50% mark (50.7%) of volumes in the Chinese market. A total of 1.72 million cars were sold, down 2.8% year-on-year and 2.6% by June 2024. But electrics were up 37% to 878 thousand units (482 thousand Bev, +14.3%, and 396 thousand Phev, +80.4%). And export jumped 20%.

Returning to the appeal, 'the EU's provisional conclusion is without legal and factual basis,' said a spokesperson. "It has seriously violated WTO rules and undermined global cooperation to tackle climate change. We urge the EU to immediately correct its mistakes and jointly safeguard economic and trade cooperation between China and the EU and the stability of the electric vehicle supply chain."

The move was largely predictable and is part of the diplomatic chess game we will witness between now and November, when Brussels' decision, after consultation with the 27 EU states, will become final. Relations between Beijing and the EU have reached new lows in recent months as the bloc gradually aligns its diplomatic line with that of the United States.

At the beginning of July, the EU imposed provisional tariffs on certain car imports from China, which, if final, would raise the rates up to 48%, after an eight-month investigation into Chinese state aid to electric vehicle manufacturers. The move provoked immediate condemnation from Beijing. The People's Republic also threatened retaliation against European farmers (pork) and aircraft manufacturers and launched an anti-dumping investigation against the French alcohol industry.

The big state-owned Saic Motor - the parent company of Europe's most successful brand, the former British MG Motor, and a 40-year partner of the Volkswagen Group in China - is currently subject to the higher tariff of 37.6%, on top of the existing 10% rate, while the parent company of Volvo Car, the Geely group, and the BYD giant, which has become the global number one in terms of Bev and Phev volumes in just a few years, are subject to additional charges of 19.9% and 17.4% respectively.

Ue conferma dazi provvisori su auto elettriche cinesi da domani

The electric vehicle sector is increasingly caught up in trade and geopolitical tensions as the world, particularly the West and especially China, moves away from the internal combustion engine. China has become a world leader, investing a lot of public money (some $230 billion between 2009 and 2023, according to estimates by a US think-tank, the Center for Strategic and International Studies, and having recognised electric vehicles as crucial for the environment and economic development.

The United States has also tried to restrict the import of Chinese-made electric vehicles by imposing tariffs above 100 per cent. Canada is considering similar measures. And China has also lodged a complaint with the WTO over US incentives for electric vehicles, arguing that the rules that exclude from subsidies under the Inflation Reduction Act (Ira) for the purchase of cars for which a substantial percentage of critical materials (such as lithium) made in the USA or coming from countries with which the USA has free trade agreements, are discriminatory. (Al.An.)