The European Union is dealing with two very important issues relating to the automotive sector: the ban on new combustion engine cars in 2035 and import duties on Chinese cars.
These two issues are very sensitive and the decisions taken today will have major repercussions on the industry and the economy at international level. On the first point, the European People's Party wants to change the rules that have been applied until now. On the second point, a government source quoted by Reuters, but who has remained anonymous, says that Germany, whose carmakers will make a third of their sales in China in 2023, wants to put an end to customs duties.
France has been one of the strongest supporters of China's tariffs, but now faces an election. However, while the game is still open, a swift decision will have to be taken. Today, 4 July, provisional duties on electric vehicles produced in China will come into force. Beijing has called for a rethink, but dialogue between the two sides is not easy.
Meanwhile, while Europe is calming down with elections in several countries, the threat of countermeasures from the Chinese government is getting closer and closer.
Which countries are for and against?
For the Commission, the tariffs are necessary to counter the cheap loans and other subsidies that the Chinese government has allegedly granted to its carmakers in order to keep vehicle costs down, the ultimate aim being to create a level playing field.
Germany is reportedly keen to negotiate with China because its carmakers argue that the rising cost of electric vehicles to consumers undermines the EU's goal of being carbon neutral by 2050 and, more importantly, because Beijing's retaliation could lead to additional tariffs on EU luxury car exports (as well as other products including cognac and pork), which would be bad for the market.
Reuters polled EU governments and found that most countries are still weighing up the pros and cons of escalating the trade dispute. France, Italy and Spain, which account for 40% of the EU's population, have said they would support tariffs. "Europe must defend itself if our companies are harmed and cannot compete on equal terms", the Spanish economy ministry told Reuters.
According to other official and government sources, the Czech Republic, Greece, Ireland and Poland are still discussing the issue, while Belgium and the Netherlands are waiting with bated breath as they face new internal elections.
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What are the next steps?
The issue will be put to the members in a consultative vote in the coming weeks, and this will be the first official test of support in a landmark case for the Commission. As the press agency points out, EU members will also vote in October on whether the Commission, following the current investigation, will propose multiannual customs duties.
Whatever the outcome of this case, it is clear that it will be decisive for future relations between Europe and China. "To be honest, this is also a message aimed particularly at the German Chancellery", said Alicia Garcia Herrero, senior researcher at the Brussels-based economic think-tank Bruegel. The result will also determine internal relations within the Union itself.