[China Net Review] Why should the EU provoke a trade friction without winners？

China network commentator Le Shui

Recently, the European Commission passed the final vote to impose countervailing duties on electric vehicles in China, and decided to impose tariffs of 7.8%-35.3% on electric vehicles imported from China at the end of October. Since Ursula von der Leyen, President of the European Commission, announced in September 2023 that an anti-subsidy investigation was launched on electric vehicles in China, the EU’s trade sanctions against China have been hanging for more than a year. In the meantime, despite repeated representations with the EU, China failed to prevent the stick of trade sanctions from finally falling. This move marks a substantial step for the EU in the wrong direction of trade protectionism, and it also means the further escalation of trade friction between China and Europe. The trade friction between China and Europe is not in the interests of either side, and the trade sanctions stick that the European side actively waved will eventually fall back on itself.

Comics: run counter to each other

China and the European Union are the second and third largest economies in the world respectively. The economies of the two countries are equal, their economic structures are complementary, and they have broad consensus on promoting multilateralism and tackling climate change. Under the principle of complementary advantages, mutual benefit and win-win, China-EU economy has already formed a pattern of interest blending of "you have me and I have you". In 2023, the total trade volume between China and Europe was US$ 783 billion, and China and the EU were each other’s second largest trading partners. The EU’s erection of trade barriers against China is bound to hurt itself.

In view of this "final vote" result, China quickly took countermeasures. On October 8th, the Ministry of Commerce of China announced that it would take anti-dumping measures against imported brandy originating from the European Union. In addition, the Ministry of Commerce of China conducted anti-dumping and countervailing investigations on pork and dairy products imported from the European Union in June and August this year respectively. China’s series of counter-measures can be described as "hitting the snake seven inches". In 2023, the total amount of brandy, pork and dairy products exported by the EU to China reached about $10 billion. If we lose the China market, the related industries in the European Union will feel a great pain. In early September, a large number of French brandy producers and farmers gathered in the cognac area to protest. The chairman of the cognac producers’ guild said, "If the EU decides to impose tariffs on China’s electric cars, China’s countermeasures will force French brandy to disappear from the China market." "We are victims, but no one listens to our opinions."

Compared with brandy, pork and dairy products, the EU exports more cars to China. In 2023, the EU exported 196,000 fuel vehicles to China alone, with a total amount of US$ 17.9 billion. If China extends the countermeasures to the automobile industry in the EU, the EU economy will undoubtedly suffer heavy losses.

People of insight in Europe have long foreseen this. A few days before the vote, German Chancellor Angela Scholz publicly called on the EU to manage trade risks wisely and not to rashly impose punitive tariffs on electric vehicles in China. German Finance Minister Lindner also publicly stated that "for a key industry in Europe and a key department in Germany, the disadvantages of a trade war with China outweigh the advantages".

In fact, nearly half of the EU countries, represented by Germany, have been complaining about the initiative of the European Commission to provoke trade frictions with China. From the specific voting process, it is not difficult to find that there are serious differences within the EU on the issue of imposing tariffs on electric vehicles in China. The final voting results showed that there were 10 countries in favor, 5 countries against and 12 countries abstained-which caused a "spectacle" of abstaining more than voting in favor. It is worth mentioning that Spain and Sweden, which originally agreed to increase tariffs in the pre-voting in July, abstained from voting this time. Therefore, compared with the previous pre-voting results, the number of opposition and abstention votes is increasing, while the number of votes in favor is decreasing.

It is precisely because of the huge differences within the EU that European Commission officials said before the vote that even if the decision to increase tariffs is passed, the EU is still willing to continue negotiations with China to seek alternative solutions. This statement of the European Commission undoubtedly implies to the outside world that this "final vote" is not a final decision. In other words, this vote is more like a "performance". It remains to be seen whether the tariff stick dropped by the EU is virtual or real.

Since the EU has not made up its mind to escalate the trade friction with China, why should it take pains to direct and perform a "voting show"? There is naturally a shadow of the United States behind this. In May this year, after the United States announced that it would impose tariffs on China’s electric vehicles, it has been doing everything possible to lobby the European Union to join the camp to contain China’s new energy industry. According to the data, in 2023, China exported only 12,000 electric vehicles to the United States, while nearly 500,000 electric vehicles were exported to the European Union. In fact, America’s "drunkenness is not about wine", and it is its real intention to pull the European Union into the partnership. In the context of the protracted Ukrainian crisis, the EU urgently needs the United States to provide security guarantees, so it does not dare to say "no" to the United States easily on the issue of tariffs on China.

There is no geopolitical contradiction or fundamental conflict of interest between China and Europe. Win-win cooperation is the main tone of China-EU relations, and trade friction will only cause both sides to lose. It is hoped that the EU will re-weigh the pros and cons on the tariff issue with China, make a correct decision in favor of China-EU relations, and avoid being "biased" by the protectionist policies of other countries.

Editor: Jiang Xinyu, Zhang Yanling, Cai Xiaojuan

Note: This article is supported by China Positive Energy Network Communication Special Fund of China Internet Development Foundation.