(Bloomberg) -- European Union member states signaled support for provisional tariffs on electric vehicles shipped from China in a secret non-binding vote this week that showed the bloc’s appetite for taking on the world’s second-biggest economy over trade concerns.
It isn’t known how each nation voted in the advisory ballot, but it also showed there are still signs of unease. A number of key governments, including Germany, abstained, with some planning to form a firmer position at a later date, according to people familiar with the matter, who spoke on condition of anonymity as the procedure is confidential.
The EU moved ahead earlier this month with plans to impose provisional tariffs on EVs made in China that would raise rates to as high as 48% after an investigation showed that Beijing subsidizes its EV industry to a degree that causes economic harm to the bloc’s carmakers.
It has applied temporary duties on three Chinese manufacturers that were sampled during its anti-subsidy probe. State-owned MG maker SAIC Motor Corp. faces a 37.6% additional tariff on top of the existing 10% rate, while Volvo Car AB parent Geely Automobile Holdings Ltd. and BYD Co. will be hit with added charges of 19.9% and 17.4% respectively.
Other EV producers in China that cooperated with the investigation but haven’t been sampled will be subject to a weighted average duty of 20.8%, while firms that didn’t cooperate will face a 37.6% top-up. Western carmakers such as Renault SA, BMW AG and Tesla Inc. are also affected, with the US manufacturer currently accounting for the bulk of EU-bound EV shipments from China.
Definitive duties would kick in by November barring an alternative solution or unless a qualified majority of EU member states block the move when they hold the final vote. The provisional duties will be issued as “guarantees” and be collected only if final duties are imposed. Tesla could get an individual rate at that stage.
“Germany has taken part in the discussion without making a commitment,” German economy ministry spokesman Korbinian Wagner said. “In the view of the German government, it is now crucial to seek a swift and amicable solution with China.”
Talks between the EU and China are ongoing. For Brussels, any solution has to be grounded in World Trade Organization rules and address the underlying harmful subsidies the probe has identified. Beijing has looked to transform the investigation into a negotiation and has been trying to divide member states by pressuring them bilaterally, Bloomberg has reported.
China has threatened to retaliate if the EU moves ahead with the levies. It has already launched a targeted anti-dumping probe into pork imports, and the findings of an investigation into EU spirits are due early next year but could come anytime.
Beijing has warned it could target European agricultural goods, the aviation sector and cars with large engines. It could also decide to challenge the EU’s probe at the WTO.
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The European Commission, the bloc’s executive arm, is still sorting out some of the details of how the tariffs would be imposed. One wrinkle is how to treat manufacturers who weren’t assessed in the course of the anti-subsidy investigation because they hadn’t yet started exporting cars.
This applies to Volkswagen AG and BMW joint ventures with Chinese carmakers that manufacture VW’s Cupra Tavascan SUVs and BMW’s Mini electric vehicles. The commission has offered to apply an additional 20.8% duty to these cars — the rate applied to the company they’re partnered with and to companies that cooperated — rather than than the 37.6% rate for those who didn’t comply with the probe or the standard interim treatment for newcomers that ask to be assessed.
A spokesperson for BMW said the company is in discussions with the commission regarding a lower tariff, but that no decision has been reached yet. A VW spokesperson declined to comment.
--With assistance from Michael Nienaber, Wilfried Eckl-Dorna, Craig Trudell and Monica Raymunt.
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