EU governments face key vote on Chinese electric vehicle tariffs Reuters

By Philip Blenkinsop

BRUSSELS (Reuters) – European Union members face a key vote on Friday on whether to impose tariffs of up to 45 percent on imports of Chinese-made electric vehicles in the bloc’s top trade case, which risks retaliation from Beijing .

The European Commission, which oversees the bloc’s trade policy, has proposed definitive tariffs for the next five years to counter what it says are unfair Chinese subsidies, following a year-long anti-subsidy investigation.

Under EU rules, the Commission can impose the tariffs for the next five years unless a qualified majority of 15 EU countries, representing 65% of the EU population, vote against the plan.

Reuters reported on Wednesday that France, Greece, Italy and Poland would vote in favor, enough to avoid a majority blocking against the tariffs.

In the absence of a qualified majority in any case, the EU executive can adopt the tariffs. However, they could also submit an amended proposal if they wanted to secure more support.

The region’s biggest economy and top carmaker, Germany, will vote against the tariffs, people with knowledge of the matter told Reuters late on Thursday.

German automakers, for whom China accounts for nearly a third of their sales, have been particularly vocal against the tariffs. Volkswagen (ETR: ) said they were “the wrong approach.”

Spain’s economy minister, a previous supporter of tariffs, also said in a letter to European Commission Vice President Valdis Dombrovskis seen by Reuters on Thursday that instead of imposing tariffs, the EU should “keep negotiations open … beyond of compulsory voting. “to reach an agreement on prices as well as the relocation of battery production in the block.

Spanish Prime Minister Pedro Sanchez has already said on a visit to China that the EU should reconsider its position.

Some EU members are worried about Beijing’s response. In moves seen as retaliation, Beijing this year launched its own investigations into imports of brandy, dairy and pork products from the EU.

However, the EU’s position towards Beijing has strengthened over the past five years, now viewing China as a potential partner on some issues, but also as a competitor and systemic rival.

The commission says China’s spare production capacity of 3 million electric vehicles a year, which had to be exported, is twice the size of the EU market. Given the 100% tariffs in the United States and Canada, the most obvious outlet for these electric vehicles is Europe.

The EU executive has said it is willing to continue negotiating an alternative to tariffs with China and could reconsider a price commitment – involving a minimum import price and usually a volume cap – after previously rejecting them those offered by Chinese companies.

One option under negotiation is minimum import prices calculated using criteria such as the range, battery performance and length of the electric vehicle, as well as whether it is two or four wheels, a source familiar with the matter said.

Tariffs range from 7.8 percent for Tesla (NASDAQ: ) to 35.3 percent for SAIC and other companies believed to have failed to cooperate with the EU investigation. These tariffs are in addition to the standard 10% EU import duty on cars.