All eyes on China’s Wang, EU’s Dombrovskis talks ahead of crunch tariffs vote
Chinese Commerce Minister Wang Wentao and EU Trade Commissioner Valdis Dombrovskis are set for tough talks on Thursday morning (19 September) ahead of a pivotal vote by EU member states next week.
Wang’s visit, which follows whistle-stop trips to Germany and Italy earlier this week, is a last-ditch effort ahead of a vote next Wednesday (25 September) on whether to definitively implement the EU executive’s proposed duties of up to 35.3% on electric vehicles (EVs).
According to reports by the China Chamber of Commerce to the EU (CCCEU), Wang told Chinese and European automakers at a meeting in Brussels on Wednesday (18 September) that China-EU trade ties are now at a “crossroads”, with “one path leading to openness and collaboration [and] the other to protectionism and isolation”.
Commission spokesperson Olof Gill told Euractiv on Wednesday that the European Commission remains “open to a negotiated solution […] provided that such a solution is adequate and effective in addressing the risk of injury to EU industry that we established in our investigation.”
The European Commission argues the tariffs are necessary to protect European automakers against unfairly subsidised Chinese competitors.
Member states’ support contended
When asked whether the EU executive is concerned that the proposed tariffs could be blocked next week, Gill said, “The Commission isn’t worried or not worried” about the vote.
Fifteen of the EU’s 27 member states, representing at least 65% of the union’s population, must vote against the tariffs to prevent their introduction for five years starting from the end of October.
Germany abstained in an initial non-binding vote on the proposed duties held in early July, while Spain voted in favour. Only four member states voted against it.
Beijing’s push to persuade European capitals to vote against the tariffs reportedly yielded some success over the past week. Spanish Prime Minister Pedro Sánchez and German Chancellor Olaf Scholz both supported Beijing’s call for a negotiated solution to the dispute.
However, one person familiar with the matter told Euractiv that Germany will likely abstain again next week unless a block is likely to be achieved.
On Monday, Italian Foreign Minister Antonio Tajani said after a meeting with Wang that Rome will continue to “support the position of the EU”.
Alicia García-Herrero, senior fellow at Bruegel think tank and chief economist at French investment bank Natixis, told Euractiv, “I don’t think [China] can argue they have 15 votes because that would be a lot. But they can argue that they’re building up [votes].”
“I think they are trying hard to say: ‘Look, this voting could go wrong for you. You [could] lose face – negotiate first’,” she added.
EU Commission has ‘woken up’
Tobias Gehrke, senior policy fellow at the European Council on Foreign Relations (ECFR), was sceptical that the Commission would change its position before the vote.
“I think it would undermine the Commission tremendously if they would backtrack on this,” he told Euractiv.
“The Commission is quite set, I think, in its approach to China: you could say it is quite bellicose, or you could say they’ve woken up.”
Gehrke also noted that Spain and Germany’s support for a negotiated solution may have been influenced by fears of Chinese retaliatory duties on pork and combustion engine vehicles – key export markets for Madrid and Berlin, respectively.
“I can’t read [Sánchez’s] mind. But of course, it looks very bad. There is a clear trade-off for some national benefits that would undermine the EU’s position. And then, of course, Germany is jumping on it right away.”
The price undertakings’ flop
Wang’s visit follows the Commission’s announcement last week that it had rejected “price undertakings” by the affected Chinese automakers – in which they pledged to set selling price floors on their EVs to avoid the proposed tariffs – adding on Monday (16 September), that the deadline for further price offers had expired on 24 August.
No details of the price offers have been released. However, a spokesperson for the CCCEU, which represents more than a thousand Chinese firms operating across the bloc, told Euractiv that the offers were “flexible, constructive, [and] highly practical.”
The spokesperson added that the offers would have been supported by a “significant number of EU member states” – a claim corroborated by one EU diplomat.
Several other diplomats, however, stressed that member states’ support was largely “passive” in the sense that EU capitals favouring a negotiated settlement were not closely involved in the Commission’s decision and did not intensively lobby Brussels to alter its position.
‘A political battle’: tariffs decision a testing ground for Europe
With some models selling for as little as $10,000 in China, analysts also noted that, even if the tariffs are eventually imposed, they are unlikely to render Chinese EVs uncompetitive.
They also pointed to the broader political context of today’s meeting, in particular mounting tensions over China’s increasingly close ties to Russia as well as the political status of Taiwan, a self-governing island that Beijing claims as part of its territory.
“It’s not about the […] margin they’re going to lose. It’s a political battle,” said García-Herrero.
“If Europe really cannot get its act together on this… [we] are not going to get our act together on anything.”
Gehrke said that Europe’s main concern going forward should not be fear of Chinese retaliation but rather the extent to which Beijing will attempt to avoid the tariffs by investing in EV manufacturing in Europe.
“Even with these tariffs, Europe will need flanking measures to ensure that Chinese investors bring real, local value,” he said. “This means engaging with local suppliers and not just assembling while keeping all the critical value and knowledge in China.”
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