China and EU set for talks aimed at easing tensions over trade tariffs

Amid escalating trade tensions, China’s commerce minister, Wang Wentao, and the European Commission’s trade commissioner, Valdis Dombrovskis, are set to meet this morning in Brussels to discuss trade relations between the two parties.

China and EU member states are meeting in Brussels today to try and tame escalating trade tensions after the European Commission (EC) proposed additional tariffs of up to 35.3% on Chinese electric vehicle (EV) imports, citing concerns that Beijing’s “unfair subsidies” for Chinese-made EVs could cause significant harm to local car manufacturers.

It comes after China’s Commerce Minister, Wang Wentao, met with Roberto Vavassori, President of the Italian Association of the Automotive Industry, in Turin, last weekend.

According to a press release from China’s Ministry of Commerce, the two parties exchanged views on the EU’s anti-subsidy investigation into Chinese electric vehicles and discussed cooperation between the Chinese and Italian electric vehicle industries.

The rush to resolve tensions comes ahead of a key EU vote on the tariffs on 25 September.

Beijing probes EU pork and brandy imports

In response to the EU’s trade tariffs, China has intensified its investigation into European food and drink imports, including pork and brandy.

However, recent developments suggest that both China and the EU have expressed a willingness to ease the growing trade conflict.

The forthcoming discussions between Chinese and EU officials are of considerable significance in addressing tensions and seeking compromises from both sides.

In the latest developments, the EU has further reduced a series of proposed tariffs on Chinese-made EVs, with Tesla being the biggest beneficiary. The levy on China-made Teslas has been reduced to 7.8% from 9%, following an earlier cut from 20.8% last month.

The tariffs on Geely have been lowered to 18.8% from 19.3%, while those on SAIC and companies that did not cooperate with the EU’s investigations have been reduced to 35.3% from 36.3%.

However, the tariff on the best-selling Chinese brand, BYD, remains unchanged at 17%.

These additional tariffs are on top of the existing 10% duty applied to China’s EV imports.

Tariffs still require backing of EU member states

The new EU tariffs will need to be approved by a majority of the population, or 15 of the 27 EU member states, before 31 October. If approved, the new tariffs will remain in effect for the next five years.

In response, a spokesperson for China’s Ministry of Commerce stated, “China is willing to continue working closely with the EU to reach an early solution that serves the common interests of both sides and conforms to World Trade Organisation rules, in order to promote the healthy and stable development of China-EU economic and trade relations.”

The spokesperson added, “Although we do not agree with or accept the EU’s disclosure of the final ruling, we remain committed to resolving the friction through dialogue and consultation, with the aim of finding a mutually acceptable solution,” according to China’s state media, Xinhua News Agency.

Last week, the European Commission rejected proposals by Chinese EV manufacturers to set a price floor as a way to offset government subsidies.

An EC spokesperson commented, “Our review focused on whether the proposals would eliminate the injurious effects of subsidies and whether they could be effectively monitored and enforced.

“The Commission has concluded that none of the proposals met these requirements,” adding, “The Commission remains open to a negotiated solution, but it must fully comply with WTO rules and effectively address the injurious effects of the identified subsidies.”

In June, China said it had launched an anti-dumping investigation into pork imports from the EU, with Spain a primary exporter in the single market.

Recent talks with Spanish PM ‘constructive’ – Beijing

Spanish Prime Minister Pedro Sanchez visited China last week, seen as an effort to ease trade tensions between the countries. Chinese President Xi Jinping said the visit played a “constructive role” in improving ties between China and the EU.

China also launched a similar probe into EU brandy imports in January, citing that EU products could significantly harm its domestic industry.

China’s Ministry of Commerce said in the latest statement: “The investigating authority preliminarily determines that there is the dumping of the imported related brandy originating from the EU, that the domestic-related brandy industry is threatened with substantial damage, and that there is a causal relationship between the dumping and the threat of damage.

“But the Ministry will not impose tariffs for now, which would heavily impact the French cognac exports, accounting for most of China’s brandy imports from the EU.”