Countervailing Duties on Chinese Electric Vehicles

On July 4th, nine months after the initiation of an ex officio anti-subsidy investigation, the European Commission has imposed provisional countervailing duties on imports of battery electric vehicles (BEVs) from China. Based on the investigation, the Commission has concluded that the BEV value chain in China benefits from unfair subsidisation, which is causing a threat of economic injury to EU BEV producers. The investigation has also examined the likely consequences and impact of these measures on importers, users and consumers of BEVs in the EU.

Consultations with the Chinese government have intensified in recent weeks, following an exchange of views between Executive Vice-President Valdis Dombrovskis and Chinese Trade Minister Wang Wentao. Contacts continue at technical level with a view to reaching a WTO compatible solution, which adequately addresses the concerns raised by the European Union. Any negotiated outcome to the investigation must be effective in addressing the injurious forms of subsidisation identified. The individual duties applying to the three sampled Chinese producers are: BYD: 17.4%; Geely: 19.9%; SAIC: 37.6%. Other BEV producers in China, which cooperated in the investigation but were not sampled, are subject to the 20.8% weighted average duty. The duty for other non-cooperating companies is 37.6%. Compared to the rates pre-disclosed on 12 June 2024, provisional duties were adjusted slightly downwards based on comments on the accuracy of the calculations submitted by interested parties. All the detailed findings of the investigation are reflected in the Implementing Regulation which is now published in the Official Journal. These provisional duties will apply as of 5 July 2024, for a maximum duration of four months. Within that timeframe, a final decision must be taken on definitive duties, through a vote by EU Member States. When adopted, this decision would make the duties definitive for a period of five years.

Procedure and next steps

On 4 October 2023, the Commission formally initiated an ex-officio anti-subsidy investigation on imports of battery electric vehicles for passengers originating in China. Such an investigation must be concluded within maximum 13 months of initiation. Definitive measures must be imposed no later than 4 months after imposition of provisional duties. Provisional countervailing duties are secured by a guarantee (in the form to be decided by customs in each Member State), and may be collected under certain circumstances only when a decision has been made to impose definitive duties. Following the ordinary trade defence procedure, Member States will now vote on provisional measures, by written procedure and by simple majority, no later than 14 days after publication of the provisional measures in the Official Journal. This vote will follow the so-called advisory procedure, under comitology rules (no legally binding effect). Interested parties also have the possibility to request hearings with the Commission services within 5 days from entry into force of provisional measures, and to provide comments within 15 days from entry into force. After that, having taken into account the comments by interested parties, the Commission will disclose its proposal for definitive measures, if any, and allow adequate time (10 days) for interested parties to comment. The Commission will then present the final determination to Member States, which will vote pursuant to the examination procedure under comitology rules (Commission proposal adopted unless there is qualified majority against it). This vote will have binding effect. Any potential measures will be in force for 5 years, extendable upon substantiated request and subsequent review. Following a substantiated request, one BEV producer in China – Tesla – may receive an individually calculated duty rate at the definitive stage. Any other company producing in China not selected in the final sample that wishes to have its particular situation investigated can ask for an accelerated review, in line with the basic anti-subsidy Regulation, just after imposition of definitive measures. The deadline for concluding such a review is 9 months since its request.

Background

The investigation was announced by Ursula von der Leyen, President of the European Commission, on 13 September 2023 during her State of the European Union (SOTEU) speech. This decision was based on growing evidence-based concerns about the recent and rapid rise in low-priced exports of electric vehicles coming from China to the EU. The Commission is following strict legal procedures in line with EU and WTO rules, allowing all parties concerned, including the Chinese government and companies/exporters, to present their comments, evidence and arguments.