Anti-subsidy investigation

In recent years, imports and the share of electric vehicles from Chinese manufacturers in the EU have increased. From the Commission’s point of view, there are indications that Chinese car manufacturers benefit from subsidies from the Chinese government and that this has a negative impact on European economic operators, thus leading to a distortion of competition. The European Union had therefore already initiated an anti-subsidy investigation into the import of new battery-electric vehicles originating in the People’s Republic of China in October 2023 on the basis of Regulation (EU) 2016/1037 on protection against subsidized imports from countries not members of the European Union (see notice of 4 October 2023).

According to the information, the investigation is to be completed this month and any compensatory measures announced. Since March 6, 2024, all imports of Chinese electric vehicles with a certain CN code are subject to customs declaration. The customs declaration ends on December 6, 2024. If the Commission concludes that countervailing duties are necessary, there is a risk of retroactive tariffs being imposed on all imported goods since the beginning of March.

At a glance:

The procedure

• As part of the anti-subsidy investigation launched in October 2023, the EU is conducting a survey (using random samples) of both Chinese car manufacturers on the existence of countervailable subsidies and car manufacturers in the EU on possible distortive effects.
• Since the Commission has evidence of anti-competitive subsidies from the Chinese government, as of 6 March 2024, all imports of electric vehicles falling within CN code 87038010 originating in China are subject to customs registration for a period of nine months (see Implementing Regulation (EU) 2024/785 on the registration of imports of new battery-electric vehicles for the transport of passengers originating in the People’s Republic of China).
• If, at the end of the investigation, the Commission concludes that countervailing measures are necessary, countervailing duties could be imposed, i.e. the duty currently applicable to imports of the products in question of Chinese origin could be increased.
• Please note that the countervailing duty may be applied retroactively to all customs-registered imports (imports from 6 March 2024).
• The Commission may extend the measures (in the first step ordering customs registration and then introducing countervailing measures) pursuant to Article 23 of Regulation (EU) 2016/1037 to goods of other CN codes if there are indications of circumvention.
• Therefore, options for changing supply and production chains should be carefully examined.

outlook

Even if there is (so far) no consensus within the EU on the necessity and appropriateness of countervailing duties, it can be assumed that the EU will impose a countervailing duty on Chinese electric vehicles in the future. Observers, for example, consider an increase in the current tariff rate from 10 to 15 to up to 30 percent to be realistic.

Headwinds are coming from the Association of the Automotive Industry (VDA): “Countervailing duties on electric cars imported from China are not suitable for strengthening the competitiveness of the European automotive industry,” explained a VDA spokesman.

Not only Chinese car manufacturers, but also those with production facilities in China must expect consequences. Affected car manufacturers should monitor developments closely and take action if necessary.

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