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By Philip Blenkinsop
BRUSSELS (Reuters) – The European Commission plans to impose temporary duties on electric vehicles produced in China ranging from 17.4% to 38.1%, in addition to its standard 10% tariff on car imports.
The fees are scheduled to take effect by July 4.
What are temporary measures?
Temporary duties could be imposed within nine months of the start of an EU anti-subsidy investigation if the Commission concludes it needs to prevent damage to EU industry.
They can be applied for a maximum of four months, at which point the Commission will decide whether to apply the final fee, known as the final fee. In the case of electric vehicles, the deadline for this is November 3.
Interim fees are not collected unless a final fee is imposed at the end of the investigation. If the final fee is lower or does not apply, the interim fee will be adjusted accordingly. Until then, customs authorities usually require a bank guarantee from importers.
Charges could also be applied retroactively for up to 90 days, as in the EV case from early April, with a decision to be made at the end of the investigation.
what happened after that?
By 4 July, the Commission will publish in the Official Journal of the European Union a lengthy document detailing the ongoing investigation and its findings. The provisional charge will then apply the following day.
Interested parties, such as China and electric car producers, have until July 18 to comment on the results. They can also request a hearing.
The committee has already visited more than 100 automakers’ sites in China and Europe and conducted the bulk of its investigations.
Its final report is generally considered to be a confirmation of its interim findings, with possible amendments after feedback is received.
Final fees are often slightly lower than interim rates, reflecting acceptance of some of these arguments.
One new item will be Tesla (NASDAQ:) asking the commission to calculate a separate fee rate for it.
The largest exporter of electric vehicles from China to Europe would want a lower rate of 21% for companies that have cooperated with the investigation, which is the group that currently exists.
As an alternative to tariffs, exporters can commit to selling their products at or above the minimum price. Chinese exporters agreed to such an undertaking in the case of solar panels a decade ago. However, cars are not commodities, so it is difficult to see how a minimum price could be implemented.
Who decides?
In the interim phase, the Commission has full power to impose tariffs, although it consults EU members and is supposed to take their positions into account. They are scheduled to submit their positions by July 15.
At the end of the investigation, the committee can propose final duties, which usually apply for a period of five years.
It could be blocked if a qualified majority of the 27 EU members oppose these measures. A qualified majority means 15 EU members representing 65% of the EU population. In most cases, there is no obstructing majority.
What happens after the investigation?
Any company not in the sample group BYD (SZ:), Geely and SAIC that wants to do its own homework can request a “rapid review” immediately after the final measures are imposed. This review must continue for a maximum of nine months.
The Commission can also conduct an “interim review” after a year if the measures are no longer necessary or if they are not sufficient to address the subsidies.
The same Commission often looks into whether producers evade tariffs by exporting spare parts for assembly elsewhere. For the European Union, this circumvention exists if 60% or more of the value of the parts is imported from the duty-bound country and if the value added in the assembly does not exceed 25%.
Companies can challenge these measures before the European Court of Justice. China could take the EU to the WTO. Both legal paths can take more than a year.
