According to Bloomberg's report on October 7th, the European Union is preparing so-called ' safeguard measures' to restrict the entry of Chinese hybrid vehicles into the EU market, in order to reduce the trade deficit.
According to people familiar with the matter, after the significant increase in sales of hybrid vehicles manufactured in China in Europe, the European Commission, which is responsible for EU trade affairs, may implement these restrictions. Currently, Chinese brands account for a quarter of the total sales of hybrid vehicles in Europe. At the same time, the import growth of Chinese pure electric vehicles, which are facing high tariffs from the EU, has slowed down.
This news drove up the stock prices of car manufacturers. The stock price of Volkswagen rose by 4.6%, that of Renault rose by 6.1%, and that of the Mercedes-Benz Group rose by 2%.
If the import volume of products from a certain industry into the EU increases significantly, safeguard measures allow the EU to impose restrictions on products from that industry. One way the European Commission can do this is by implementing tariff quotas, which means imposing tariffs on imports exceeding a certain quantity. Sources familiar with the matter say that the proposed EU import ceilings will have a time limit.
According to people familiar with the matter, the European Commission plans to use hybrid vehicles as a pilot project. If successful, this approach could be replicated in other industries where the EU considers there to be trade imbalances.
These unnamed sources said that Maros Sefcovic, the EU commissioner for trade affairs, will travel to Beijing later this week to hold talks with Chinese officials. The EU's plans may change depending on the progress of these talks.
According to people familiar with the matter, one of the key goals of the EU is to keep the import limits on Chinese hybrid vehicles at a sufficiently low level, in order to avoid provoking a retaliatory response from Beijing.
Previous media reports stated that the EU and China have voluntarily restricted the export of hybrid vehicles to Europe, otherwise they may face higher tariffs.
China's Ministry of Commerce emphasized last month that so-called voluntary export restrictions seriously violate WTO rules and go against the laws of market economies and the principle of fair competition.
China firmly opposes this. China's position is consistent. Any solution between China and Europe must ensure a balance of interests, comply with WTO rules and respective domestic laws, and fully take into account the interests of both industries.
The EU's trade deficit with China exceeds 1 billion euros (US$1.1 billion) daily. The European Commission has been intensifying its trade policies to protect European industries that are affected by Chinese imports. EU leaders will hold a meeting in mid-October to discuss this situation and potential new tools that can be used to counter Chinese trade practices.
The European Commission plans to introduce a series of measures by the end of this year to address trade imbalances and promote diversification of the EU's supply chains. Negotiations between Brussels and Beijing were launched earlier this year, with the EU setting October as the deadline, hoping to achieve tangible results and establish a more balanced trade relationship between the two parties.
In addition to trade and investment, negotiations also focused on issues such as intellectual property rights, reform of the World Trade Organization, and export controls. Regarding export controls, the EU sought to establish a fast application process to accelerate the supply of key Chinese raw materials. The EU also hoped that China would improve market access by reducing trade barriers and relax restrictions on goods such as brandy, pork, and dairy products.
China requests the EU to relax its own export controls, but the EU administrative authorities have rejected this request, stating that this area falls under the authority of member states.
Chinese car manufacturers achieved record market shares in the European automotive market in August. Chinese brands, including BYD, accounted for nearly 12% of the total sales of new cars in that region. Among all hybrid vehicle sales, Chinese brands accounted for one-quarter; among plug-in hybrid vehicle sales, they accounted for one-third.
Currently, hybrid vehicles from China do not face high tariffs from the European Union, unlike pure electric vehicles imported from China. Beijing has been promoting what is called a “price commitment” as a way to replace these tariffs, which involves setting a minimum price to control the overall export volume.
Earlier this week, France and Germany proposed that the EU develop and adopt a new tool to regulate the entry of relevant parties into the EU single market in times of trade warfare. As the two largest economies in the EU, France and Germany also called for the EU to launch new trade investigations in key areas such as chemicals.
