BRUSSELS — The European Commission has received five pledges from Chinese industry to set minimum prices or volume caps on exports of electric vehicles in a bid to avoid EU duties, three people close to the negotiations told POLITICO.
The top Chinese EV-makers and an industry group representing them have proposed so-called “undertakings” to the Commission — essentially a gentleman’s agreement that would allow them to avoid duties by agreeing with Brussels on price and volume constraints.
Brussels fixed the level of duties on imports of made-in-China EVs last week, following a probe into Chinese state subsidies that has escalated bilateral trade tensions. On top of existing duties of 10 percent on all auto imports, BYD will face duties of 17 percent, SAIC 36.3 percent and Geely 19.3 percent.
Unlike the punitive 100 percent duties on EV imports imposed by the United States, and now, Canada, the EU levies are intended to level the playing field to counter billions in subsidies that investigators found across the entire Chinese industry supply chain — from battery materials to shipping. The process does leave room to negotiate a deal to mitigate the duties, although chances appear slim.
SAIC and BYD each submitted a request, while Geely put in two, according to one person, who was granted anonymity like others in this piece because they were not authorized to speak about the confidential proceedings.
The fifth pledge was put forward by the China Chamber of Commerce for Import and Export of Machinery and Electronic Products (CCCME), according to two of the people.
It’s a broader proposal, covering all Chinese EV-makers, and foresees options that go beyond a price threshold, such as a volume cap. One of the people said there was little chance that the CCCME proposal would fly with the European Commission, with the different companies unlikely to meet the requirements.
Elon Musk’s Tesla has not offered any undertaking to Brussels, according to the first person cited above. The U.S. EV-maker received the lowest EU import duty of all companies investigated by the Commission, of just 9 percent, after securing an individual assessment by investigators.
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The European Commission was still holding hearings with EV producers on Friday, the last day for companies to challenge its calculations on the duties, as reported in POLITICO’s Morning Trade newsletter.
It will now communicate the proposals to EU capitals before they hold a final vote on the duties in late October to enforce them for five years. To block them, critics of the duties like Germany would need to muster a qualified majority that, based on initial soundings, would appear to be out of reach.
The commitments proposed by the Chinese EV industry are reminiscent of a dispute over cut-price Chinese solar panels in 2013. While the EU initially imposed punitive tariffs, the row was eventually settled — at least temporarily — as both sides agreed on a minimum price and volume limit on the export of Chinese solar panels to the EU.
More than a decade on, China dominates the solar supply chain, while the EU’s domestic industry is near collapse.
The Commission declined comment. “The investigation is ongoing and its proceedings are confidential,” said Commission trade spokesperson Olof Gill.