China could sue EU over special tariffs
“In order to safeguard the development interests of the electric vehicle industry and global green transformation cooperation, China has decided to file a lawsuit against the EU’s final anti-subsidy measures,” the Chinese Commerce Ministry said on the matter. The spokesperson added that the tariffs are an abuse of trade remedy measures and a practice of trade protectionism in the name of countervailing.
The lawsuit concerns the recently implemented special duties of 8 to 35 per cent on China-made EVs. EU member states approved the measure in early October, and the special tariffs have officially been in effect since 31 October.
The EU Commission first announced the special tariffs in July. Following a lengthy anti-subsidy investigation, the EU found that some car manufacturers receive unlawfully high government subsidies in China, allowing them to offer their products at more favourable prices in Europe than European companies. The exact special duties depend on the level of distortion of competition identified.
China already turned to the WTO’s Dispute Settlement Body in August, ahead of the EU’s final vote. The Chinese Ministry of Commerce argues that the EU’s provisional decision to implement special duties on electric cars made in China and imported to the EU lacked a factual and legal basis.
The WTO confirmed China’s intentions. A spokesperson said: “We can now confirm that a request from China for consultations with the European Union regarding the EU’s definitive countervailing duties on electric vehicles has been received.”
Hoping to prevent a lawsuit, the EU is sending a team to China to negotiate a compromise. That could entail Chinese manufacturers agreeing to a minimum price for which they would sell their electric cars in Europe – a proposal that has been on and off the table a few times.
China has also filed a complaint with the World Trade Organisation (WTO) about the US subsidy rules for electric cars under the Inflation Reduction Act (IRA). The Chinese Ministry of Commerce explains that these rules are “discriminatory” and have “severely distorted” the global supply chain for electric vehicles.
And SAIC recently took matters into its own hands, saying it would file a lawsuit with the Court of Justice of the European Union to protect its rights and interests. SAIC is affected by the highest special tariff of 35.3 per cent. It accuses the EU Commission of being “wrong in determining the subsidies” and “inflated subsidy rates” by ignoring important information and the company’s counter-arguments.
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