China EU imports set to face retrospective tariffs

BEV arrivals will be registered to make sellers liable for any future change in regime

China EU imports set to face retrospective tariffs
Europe looks poised to join the EU in erecting much higher barriers to Chinese BEV entry

The EU has given its clearest signal yet that its investigation into whether Chinese-made BEVs imported into the bloc receive illegal state subsidies is set to conclude that they do. And even vehicles imported before the investigation’s conclusion are set to be hit by tariff changes.

The European Commission already “has at its disposal sufficient evidence tending to show that imports of the product concerned from the People’s Republic of China (PRC) are being subsidised”, the Commission says. The alleged subsidies include:

—    direct transfer of funds and potential direct transfers of funds or liabilities

—    government revenue forgone or not collected

—    government provision of goods or services for less than adequate remuneration.

“It is alleged that the measures… amount to subsidies because they involve a financial contribution by the government of the PRC or other regional governments (including public bodies), or by private bodies directed or entrusted by the government of the PRC, and which confer a benefit to the exporting producers of the product concerned,” the Commission says. “They appear to be specific and thus countervailable… since they are limited to certain sectors, products and/or regions.”

And it is now directing EU customs authorities to take the appropriate steps to register imports of Chinese BEVs, “so that measures may subsequently be applied against those imports from the date of such registration”. In other words, Chinese imports made once registration starts will be subject to any future change on tariffs applying once the investigation concludes.

“The Commission deemed it necessary to prepare the potential retroactive imposition of measures by imposing registration in order to preclude the recurrence of such injury. Thus, should the Commission conclude that the domestic industry suffers material injury at the end of the current investigation, the collection of countervailing duties on registered imports may be deemed appropriate to preclude the recurrence of such injury,” it says.

The Commission is taking the registration step because “it is possible that, on the basis of data collected during the investigation, the injury, which would be difficult to repair, started to materialise even before the end of the investigation”. It is particularly concerned that the volume of potentially illegally subsidised Chinese BEV imports is increasing.

Chinese BEVs imports between October and January total 177,839 units, which the Commission says is an increase of 11pc compared to the monthly average over its October’22–September’23 investigation period and a 14pc jump compared to the same Oct-Jan period in 2022-23.

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How much tariffs on Chinese BEV imports could be increased from a current 10pc is thus far unclear. “At this stage of the investigation it is not yet possible to accurately estimate the amount of subsidisation,” the Commission says. “Thus, the Commission does not find it appropriate to provide an estimated amount of future liability.”  

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