(Bloomberg) --
The European Union has only seen limited progress in recent weeks in negotiations with China over a comprehensive deal to replace tariffs on electric vehicles, according to people familiar with the matter.
China and the EU are continuing technical talks after discussions in Beijing earlier this month where both sides touted some progress. However, not much has changed since those talks and there has been minimal engagement between the two sides, said the people, who spoke on condition of anonymity to discuss private deliberations.
China hasn’t yet moved toward the EU’s strict requirements on ensuring that any arrangement is enforceable and matches the effect of the anti-subsidy tariffs the bloc adopted last month, the people added. Member states also haven’t been informed of any significant progress, according to a diplomat familiar with the state of play.
The two sides have been exploring an agreement on so-called price undertakings — a complex mechanism to control prices and volumes of exports, used to avoid tariffs. Brussels and Beijing also remain at odds over the possibility of agreements with individual carmakers, including European firms that have joint ventures with Chinese companies.
The EU argues that such deals would be compliant with World Trade Organization rules while Beijing insists on negotiating an umbrella agreement led by a Chinese trade body. Discussions with a small group of European carmakers with joint ventures in China are continuing, the people said.
Spokespeople for the European Commission declined to comment.
German broadcaster N-TV reported earlier that the EU and China were nearing an agreement to replace the duties, citing remarks by a European Parliament lawmaker. Shares of Chinese carmakers rose Monday after analysts at Morgan Stanley said the negotiations bode well for the nation’s EV makers.
Talks have mostly focused on establishing a communication mechanism between Brussels and Beijing, as well as avoiding the risk of so-called cross-compensation, whereby any minimum import prices on EVs are offset by sales of other goods such as hybrid cars and accessories, Bloomberg previously reported.
The EU adopted additional definitive tariffs of up to 35% last month on top of an existing 10% rate, and those will stay in place for the next five years without an alternative agreement. China has threatened to respond to the EV levies with tariffs of its own on dairy, pork and brandy. On Monday, the EU asked the World Trade Organization for consultations on China’s measures related to brandy.
--With assistance from Michael Nienaber.
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