Approaching EU Duties on Chinese Electric Vehicles: Habeck's Delicate Diplomacy in East Asia
EU Commission Increases Customs Duties on Chinese-Made Electric Cars
Last week, the EU Commission announced enhanced custom tariffs on electric vehicles assembled in China. This decision came after a competition investigation that has been ongoing since fall, which unveiled that electric cars in China receive "unfair subsidies." This could potentially hurt EU car manufacturers economically.
Brussels has provided Beijing with a temporary reprieve following pressure from the German government: The EU, Chinese authorities, and companies are to initially negotiate the customs tariffs. If certain conditions are met, the new customs tariffs could go into effect as early as July.
A representative for Habeck clarified towards the end of the previous week that the EU Commission will lead the negotiations on tariffs. However, "the Minister won't shy away from addressing this issue," the representative added.
This issue, however, is touchy. China has already threatened retaliatory actions against pork meat imports from the EU. The country is also thinking about filing a complaint with the World Trade Organization (WTO) concerning the impending EU tariffs.
Habeck stressed before his departure the crucial relationship with China. The People's Republic is a "vital partner in tackling global challenges" such as climate change and plays a "significant geopolitical role" in security matters - for example, in the Russian aggression against Ukraine. China portrays itself as a neutral party in the Ukraine conflict but has never condemned the Russian aggression.
At the same time, China "still holds significance for many German companies as a production site, innovation center, and procurement and sales market," Habeck explained. "It's essential that we continue dialoguing and discussing fair and equal competition conditions." The sensitive topic on the ground could also involve the human rights situation in China.
First, the Minister is traveling to South Korea. In this country, "we have a strong value partnership," the Economic Minister said. South Korea is the second most important export market in Asia after China and technologically advanced. "Our aim is to expand cooperation in economics, economic security, and climate, and uncover new possibilities."
Habeck begins his journey in the South Korean capital, Seoul, and will meet with Prime Minister Han Duck Soo and Trade Minister Ahn Dukgeun. Accompanying the Vice Chancellor are several parliamentarians and representatives of German and European companies - including from the automotive industry.
From Friday, Habeck is in China: In Beijing, Shanghai, and Hangzhou, there are scheduled talks with Trade Minister Wang Wentao and Industry Minister Jin Zhuanglong, as well as company visits and an exchange with students. Habeck also plans to meet with representatives and representatives of the EU and active German and European companies on-site.
The German automotive industry hopes that the announced higher EU tariffs on electric cars from China can still be avoided through negotiation - they fear rising prices for electric cars in Europe. Federal Chancellor Olaf Scholz (SPD) also opposes punitive tariffs and supports unrestricted export business.
German economist and government advisor Jens Südekum has offered criticism of China's economic government policy. "It wouldn't make sense to first confirm Chinese subsidies and then simply accept them because we are timid," he told "Die Zeit." The import of cars from China alone poses a threat to 700,000 industrial jobs in Germany.
The resistance of German car manufacturers to China's government policies is justifiable, as they fear a tariff increase spiral. "But that shouldn't be the logic behind which the state crafts its economic policy," said Südekum, who is a member of the scientific advisory board of the Federal Ministry of Economics. "If China's production prices obliterate our manufacturers and their suppliers, it leads to massive social unrest."
