[News Terms] EU Delays Imposing Countervailing Duties on Chinese Electric Vehicles

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The European Union (EU) Executive Commission's decision to impose provisional countervailing duties on Chinese electric vehicles is expected to be delayed by one month due to the EU parliamentary elections, according to a report by Hong Kong's South China Morning Post (SCMP) on the 30th.

'Countervailing duties (相計關稅·compensation duties)' refer to tariffs imposed by an importing country on imported goods when the exporting country provides subsidies or financial support to certain export industries, thereby enhancing the price competitiveness of those export products.

Ursula von der Leyen, President of the European Commission, is giving a speech at a press conference after holding an online EU-China summit with Chinese President Xi Jinping at the European Council building in Brussels, Belgium.
[Photo by EPA Brussels/ Yonhap News]

As a type of discriminatory tariff in international trade, countervailing duties are imposed to offset the damage to domestic industries caused by significantly low import prices, and are also called 'offsetting tariffs.'

Countervailing duties can be imposed when export products from country A in a specific industrial sector are imported into country B and cause damage to the same industry in country B; when it is confirmed that country A’s export products receive export subsidies or preferential treatment guaranteed by the government of country A; and when these export products are sold in country B’s market below the manufacturing cost of the same industry in country B.

According to the SCMP report, the EU parliamentary elections will be held from the 6th to the 9th of next month in the 27 EU member states. To prevent the anti-subsidy investigation of Chinese electric vehicles from becoming an election issue, the announcement of the related decision, originally scheduled for the 5th of next month, is expected to be postponed to July 4th.

The EU Executive Commission has been conducting an anti-subsidy investigation on Chinese electric vehicles since October last year. After a nine-month investigation, it is about to reach a conclusion and announce whether to impose countervailing duties.

Chinese President Xi Jinping arrived at San Francisco International Airport in California, USA, on November 14 last year. President Xi attended the Asia-Pacific Economic Cooperation (APEC) summit held in San Francisco on the following day, the 15th.
[Photo by San Francisco AFP/ Yonhap News]

The EU views that China has dominated the global electric vehicle market by providing massive subsidies over decades to nurture its domestic CATL (Ningde Times) and BYD as the world’s first and second largest electric vehicle battery manufacturers, while also offering long-term electric vehicle purchase tax reductions to its consumers. For this reason, it is reported that the EU has concluded that countervailing duties commensurate with China’s support should be imposed.

After deciding on July 4th whether to impose provisional countervailing duties on Chinese electric vehicles, the EU plans to hold discussions for four months and then decide whether to impose permanent tariffs on the relevant products.

The EU has already initiated anti-dumping investigations on Chinese solar panels, wind turbines, electric vehicles, medical devices, and tinplate steel, raising concerns that this could escalate into a full-scale 'tariff dispute' with China. China is also retaliating against these moves by the EU.

On the 19th, China’s Ministry of Commerce announced on its website that it has launched an anti-dumping investigation into polyoxymethylene (POM) copolymers from Taiwan, the United States, the EU, and Japan. China is also reviewing anti-dumping investigations on EU pork and considering whether to raise import tariffs on automobiles from Germany and Slovakia. Earlier, on January 5th, China initiated an anti-dumping investigation on imported brandy, including French Cognac.