CCCEU Statement on the EC's pre-disclosure of provisional countervailing duties to be imposed on imports of battery electric vehicles from China

June 12, 2024, Brussels

On June 12, 2024, the European Commission (EC) announced its intention to impose provisional countervailing duties on imports of battery electric vehicles (BEVs) originating in China since early July. China Chamber of Commerce to the EU (CCCEU) expressed its shock, grave disappointment and deep dissatisfaction with this protectionist trade measure by the EC.

Regarding the provisional countervailing duty rate of up to 38.1% to be imposed by the EU, the CCCEU believes the measure will seriously impair the legitimate rights and interests of BEV manufacturers and related supply chain in China, distort the fair competition in the European market to the detriment of Chinese BEV companies and exert negative impacts on China-EU trade and cooperation in the automotive sector. Furthermore, the Chamber expresses serious concern and apprehension that the spillover effect will present challenges to China-EU economic and trade relations, as well as bilateral relations.

According to the Chamber's recent survey within the Chinese BEV industry, imposition of a 10% additional levy would already carry significant implications for most Chinese car manufacturers, resulting in a substantial negative impact on their exports to Europe. The rates spanning from 17.4% to 38.1% will pose a serious market barrier.

Despite China's dominance in the global BEV production and sales market, China's exports of BEVs to the EU accounted for only about 5% of its total BEV production in 2023. Notably, these exports are primarily comprised of European and American branded BEVs. Furthermore, the market share of Chinese BEV brands in the European market has consistently remained lower than that of local European companies.

The CCCEU emphasizes that the EU's ex officio investigation into Chinese BEVs was politically motivated and protectionism driven, lacking substantive and substantiated complaints from its domestic industry. In contrast, numerous European industry representatives have voiced concerns regarding the investigation, citing potential negative impacts on Chinese and European BEV supply chain, innovation, and market cooperation. The Chamber, along with the Chinese car industry, resonates with these serious concerns.

The Chamber underscores that despite Chinese BEV enterprises' disagreement with the original intent behind the EU's investigation, they have diligently cooperated with the EC throughout the process. This cooperation has involved responding to extensive questionnaires to their best ability and undergoing multiple rounds of on-site verifications at Chinese enterprises' facilities in both China and Europe. Regrettably, several enterprises and stakeholders have reported misuse of investigative power and misconduct by the EC during the investigation. This includes exercising investigative power exceeding the scope of an anti-subsidy investigation, unreasonable document and information requests beyond the enterprises' capacity and burden of proof, and insufficient time given to these enterprises to collect requested data and information. Additionally, several subsidy allegations were either unfounded or exaggerated, fostering what was perceived as a "witch hunt" during the probe.

During several hearings held in Brussels, Chinese enterprises subject to the investigation and other stakeholders have brought forward the above concerns regarding the investigations. Yet, the CCCEU and its members find it deeply troubling that the EC has not addressed these concerns or rectified its procedural missteps, which has significantly diminished the credibility of these proceedings. Moreover, Chinese enterprises also pointed out the EC's inadequate adherence to transparency standards throughout the investigation. The opacity surrounding the alleged subsidies and their purported impact on the European domestic industry, whether in the form of material injury or threat of material injury, has cast a shadow of doubt over the integrity of the investigation's outcomes, raising concerns among interested parties.

The CCCEU maintains that Chinese electric vehicle industry's advantage lies in technological innovation and cost management. This is achieved through continuous technological iteration and intense market competition, leveraging China's comprehensive supply chain advantages to cultivate robust market competitiveness. These advancements play a pivotal role in presenting electric vehicles as public goods within the realm of green products and technologies, thereby contributing to the global green transformation. Importantly, the CCCEU reiterated that the strength of China's electric vehicle industry does not stem from state subsidies.

The CCCEU also highlighted that within the domain of renewable energy vehicles and broader green transformation efforts to combat global climate change, the foremost challenge confronting the world is not overcapacity, but rather undercapacity, coupled with the high prices of green technologies and products. 

The European automotive industry stands as the pinnacle of European manufacturing industry, boasting unparalleled global competitiveness. Amid the transition from combustion engine cars to electric cars, market competition invigorates industry vitality. The combination of European car brands' esteemed reputation with China's BEV manufacturing innovation not only facilitates European companies' access to market and development opportunities in China, the world's largest electric vehicle market, but also boosts the global competitiveness of European local car brands. Additionally, the localization strategy of Chinese companies in Europe and talent cultivation contribute to Europe's establishment of its own BEV supply chain ecosystem.

The CCCEU voices concern that the EC's persistence in pursuing the investigation and imposing provisional duties as a trade protectionist measure may escalate trade friction between China and the EU, negatively impacting economic, trade, and business relations between the two economies. In light of the "race to the bottom" observed among certain countries in their tariff levies on electric vehicles, the Chamber urges China and the EU to seek solutions through dialogue and consultation. Nevertheless, China's electric vehicles enterprises continue to regard Europe as an important strategic market and remain committed to investing in it. Their objective is to support Europe and the world in achieving dual-carbon goals and facilitating green transformation.