According to Bloomberg's report on October 11th, the European Union will impose a limit of '350,000 units per year' on the import of hybrid cars from non-European countries. The relevant measures are expected to come into effect on December 1st.
According to a plan document obtained by Bloomberg, a quota of 350,000 units is set for the first year of implementation. Starting from the second year, the quota increases by 6% every year. The entire package is scheduled to be implemented over four years, and both parties commit to comply with World Trade Organization rules during the agreement period.
The document states that in order to comply with WTO non-discrimination principles, this import quota applies to all hybrid cars, not only to those produced in China. The quotas granted to China will be no lower than those granted to any other source of hybrid car imports.
The document states that the agreement reached between China and Europe covers both hybrid vehicles and plug-in hybrid vehicles, and is applicable to all EU import sources, including countries that have signed free trade agreements with the EU. Member states of the European Economic Area, Ukraine, Kenya, and WTO developing member states with low import shares will be exempted.
The document does not specify whether imported vehicles that exceed the quota will be subject to tariffs or if there will be mandatory import limits.
The document also reveals that China will remove tariffs on some auto parts, and reduce tariffs on footwear, ice cream, and olive oil by half. These measures are also temporary arrangements, covering exports worth approximately 4 billion euros.
In addition, both China and Europe will discuss ways to relax export controls and licensing requirements, with a focus on the supply of rare metals and permanent magnets. Both Europe and China agree to exchange more information regarding their respective export restrictions.
The spokesperson for the European Commission, who is responsible for EU trade affairs, has not responded to requests for comments. Currently, neither China nor the EU have officially announced the terms of the agreement.
This news release came after the China-EU trade and investment consultations mechanism had concluded its second session in Beijing just before the news was released.
On October 9th, Wang Wentao, Minister of Commerce of China, held talks with Sefcovic. The two sides reached a consensus on 16 issues, including trade and investment balance, export controls, intellectual property rights, and WTO reforms.
Regarding hybrid vehicle trade, the list published by China states that after intensive negotiations, both parties reached an understanding in accordance with WTO rules. However, the specific import volume or implementation mechanism was not disclosed.
After the meeting, Šefić stated that the mutual understanding reached by both parties is expected to reduce China’s export of hybrid vehicles to the EU by more than half over the next four years, involving millions of vehicles.
The person in charge of the European Department of the Ministry of Commerce of China emphasized during the interpretation of the negotiation results on October 10 that both parties, based on the principles of respecting facts, non-discrimination, and compliance with WTO rules, conducted in-depth discussions on the trade of electric vehicles and hybrid vehicles. This prevented the situation from escalating, effectively safeguarding the actual export interests of Chinese enterprises and ensuring the stable development of the Sino-European hybrid vehicle trade.
In recent years, hybrid vehicles from China have seen rapid growth in the European market. Data shows that during the month of September this year alone, imports of plug-in hybrid vehicles in the EU increased by 86%, and the import prices decreased by about 20%. In August of this year, vehicles produced in China accounted for approximately one-fourth of the sales of hybrid vehicles in Europe.
As European domestic car manufacturers face competitive pressure, hybrid vehicles have gradually become a new focus of Sino-European economic and trade tensions.
The report mentioned that Šefić plans to meet with Chinese representatives during the New Year to review the agreements reached and discuss further arrangements. Some European officials still express concern that, given the large trade deficit between China and Europe, the progress in reducing this deficit may be too slow, leaving insufficient time for the EU.
Before the negotiations begin this week, France and Germany have called for the EU to significantly expand its counter-measures. They even suggested considering cutting off trade ties with so-called "bad actors" that initiate trade wars. These two major European economies also hope that the EU will investigate whether subsidies for imported products are harming industries such as chemicals and plastics. Such investigations could lead to further tariffs.
An anonymous source who is aware of the negotiations revealed that Thacevic informed the ambassadors from EU countries about the negotiations on the 11th local time. The ambassadors generally agreed with the results of this meeting, but emphasized that this was only the beginning of a “rebalancing process” in bilateral trade relations.
According to Bloomberg, the European Commission also plans to introduce several tools by the end of the year to diversify supplies and address trade imbalances with China.
Currently, it remains unclear whether the EU will officially implement safeguard measures, what mechanisms will be used, and how these arrangements will be implemented.
