China threatens WTO action over EU electric vehicles tariffs

BEIJING: China is threatening to take the European Union to the World Trade Organisation (WTO) over the high import tariffs it is considering for Chinese electric vehicles.

China accused the European Union of “naked protectionist behaviour” in an evolving dispute over electric vehicles import duties.

Read more: EU threatens higher tariffs on Chinese electric vehicles

“China reserves the right to file a suit to the WTO and take all necessary measures to resolutely defend the rights and interests of Chinese companies,” Beijing’s commerce ministry spokesman He Yadong said.

On Wednesday, the European Commission said it would impose provisional duties of up to 38.1 per cent on imports of Chinese electric vehicles after an investigation into illegal support from Chinese government subsidies.

Decision on higher import duties not finalized

However, Brussels said there might be time to resolve the issue before the interim tariffs are imposed next month.

The provisional levies would vary between producers at 17.4 per cent on BYD cars, 20 per cent on Geely, and 38.1 per cent on SAIC vehicles.

The tariffs come after an investigation found evidence of illegal support from subsidies in China.

Chinese ministry spokesman He, however, said it lacked a “factual and legal basis.”

“The actions by the European side are suspected of violating WTO rules and are naked protectionist behavior,” He said.

The tariffs will be effective on a provisional basis starting July 4 and then permanently from November if no long-term solution is found.

Beijing said it hoped the issue could be solved through dialogue.

“We urge the EU to listen carefully to the objective and rational voices from all walks of life, immediately correct its wrong practices, stop politicising economic and trade issues, and properly handle economic and trade frictions through dialogue and consultation,” Chinese foreign ministry spokesperson Lin Jian said.

Germany also urges caution, direct talks with China

German government officials also reacted hesitantly to the EU announcement this week. Economy Minister Robert Habeck of the Greens warned of triggering a “tariff race,” and said “what’s decisive is that we now hold talks” with China.

“Tariffs as a political tool are always only the last resort and often the worst path,” Habeck said at a economic forum in Berlin on Wednesday.

Olaf Scholz’s spokesman similarly called for efforts to reach a “consensual solution.”

Read more: EU-China EV tariffs: German carmakers fear backlash

The issue pits European desires to rapidly and affordably electrify its fleet of cars against its desire to remain relevant as a producer of electric cars as well as those driven by an internal combustion engine.

Currently, the EU plans to halt the sale of all new petrol and diesel-powered cars by 2035, but European manufacturers are yet to make any electric models that can compete on price.