The EU and Beijing have concluded last-ditch negotiations over plans to increase tariffs on Chinese electric car imports amid concerns of an upcoming tit-fortat trade conflict.
The European Commission and China’s trade ministers agreed to begin negotiations to resolve a dispute regarding EU plans to increase tariffs on imports of electric vehicles from China by up to 48pc.
The EU proposal is part a crackdown on Chinese subsidies, but it threatens tit for tat retaliation as well as the intensification of tensions between both economies.
Olof Gill, EU Trade spokesman, said that Valdis Dombrovskis EU trade commissioner and Wang Wentao Chinese commerce minister agreed to continue talks following a “candid” and “constructive” telephone conversation.
Robert Habeck, Germany’s Economic Minister, had just returned from a three-day trip to Beijing. Mr Habeck is the first EU politician of any importance to visit China in order to find a solution. He was Vice-Chancellor for Olaf Scholz’s coalition government.
Germany is the biggest loser in the EU-China spat due to its automaking prowess.
German automakers have opposed the EU plan, fearing that China may impose anti-tariffs on manufacturers like BMW and Daimler.
The conciliatory tone indicates a deescalation in tensions between both sides, though Mr Habeck stressed that it is still early days.
He said, “One must be very careful. This is just the first step. Many more will be needed.”
“But this is at least a first step which was not possible previously.” Tonight is the perfect evening to avoid a trade war and maintain an even playing field.
The EU is blaming China for “unfair” subsidies that the Chinese government pays to car manufacturers.
The EU’s foreign subsidy regulations are designed to ensure that European and Chinese manufacturers have the same playing field.
US President Joe Biden has already hit Chinese EV Imports with tariffs as high as 100pc despite the fact that Chinese cars are not as common in US roads compared to EU countries.
China is attempting to create a wedge among EU nations as a retaliation against the EV tariffs. They are threatening industries which are important for certain EU states.
It launched an investigation last month into the anti-dumping of pork belly, an important Spanish export. France is also being targeted by potential tariffs for brandy and cognac.
In the next two week, diplomats from China and the EU are expected to convene to discuss the subsidy conflicts.
Mr Gill said: “The two parties agreed to engage in dialogue on the basis facts and fully respect WTO rules.”
The EU stressed that any outcome of its investigation, whether it is a negotiated or unnegotiated one, must effectively address the harmful subsidisation. Both sides will continue their engagement at all levels over the next few weeks.
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