In the forthcoming European Union member state vote on Monday on temporary tariffs on electric cars (EVs) imported from China, Germany intends to abstain. This vote represents the first hint of support for the important trade case put forth by the European Commission. The member states do not need to approve the proposed provisional tariffs, which could be as high as 37.6% on Chinese electric vehicles. However, a qualified majority of the EU’s 27 members must vote against any objections before final tariffs can be implemented.
Germany effectively supports the Commission in its ongoing discussions with Beijing regarding the EU’s largest trade case to date by abstaining at this point. Germany’s actions are related to the ongoing anti-subsidy inquiry and the negotiations between the EU Commission and the Chinese government.
Germany’s choice to abstain was seen by one source as a show of “critical solidarity” with the EU Commission. German automakers, who derived a third of their sales from China last year, oppose the taxes out of concern for possible trade war and retaliatory measures from their second-biggest trading partner, China.
Hungary, on the other hand, has voiced opposition, while France has firmly backed the case. The first formal test of the Commission’s tariff policy is still to come from the positions of the other members. This trade case is noteworthy since it was started without an industry complaint, which is unusual.
Chancellor Olaf Scholz expressed optimism that the EU executive will successfully strike an agreement with China on EVs when questioned about the abstention late on Friday. He feels this would assist the European auto industry. He did not, however, confirm Germany’s vote count. Following a meeting with Japan’s prime, Scholz declared that these cars are competitive on a worldwide scale and that owners shouldn’t be afraid of competition. He underlined how crucial it is to keep things equitable for everyone.
This preliminary vote is not legally binding and is done in writing. It is also confidential. The Commission can impose duties during the provisional period after speaking with EU members and taking their opinions into consideration.
At the end of the investigation, there will be a final vote when the Commission can suggest final obligations, usually with a five-year enforcement period.
In an effort to level the playing field, the Commission contends that duties are required to offset the subsidized loans, land, raw materials, and other perks given to Chinese automakers. This contrasts with the US proposal for a 100% tariff, which is more directly directed at Chinese automakers.
If the plan has the backing of at least 15 members, or 65% of the EU population, it might be stopped by a qualified majority of the EU’s 27 members.
