On August 20, 2024, the European Commission published a draft decision to impose definitive countervailing duties on imports of electric vehicles (EVs) from China in a range of 17 to 36.3 percent.
This has been closely followed by the international community, with many European Union (EU) member states, automotive industry organizations and companies, think tanks and academics voicing their opinions. Many have pointed out that this anti-subsidy measure enforces protectionism under the guise of “fair trade” and that promoting the EU’s EV industry should not be afraid of competition.
This photo taken on May 9, 2024 shows NIO’s 500,000th vehicle at the NIO Second Advanced Manufacturing Base in Hefei, east China’s Anhui Province. (Xinhua/Zhang Duan)
In reality, the EU’s intention is to gain the upper hand in the new round of global competition and to achieve dominance in the sectors related to the green transition and the fight against climate change. In recent years, many countries have given high priority to the sectors of the “new trio” – photovoltaic products, electric vehicles and lithium batteries – on their industrial development agenda, and the EU countries are no exception.
Following the publication of the European Green Deal by the Commission in 2019, the EU has started to focus particularly on the green transformation of the energy sector and to drive the progress of new energy industries, including the ‘new trio’. In 2020, the Commission published an industrial strategy which made it clear that it would provide investment and financing support for the green transformation of industry.
Indeed, the EU’s efforts to accelerate the development of the ‘New Trio’ and other new energy sectors aim not only to achieve the United Nations Sustainable Development Goals (SDGs), but also to use these sectors to improve the EU’s global industrial competitiveness and secure a leading position in the world – all while implementing significant industrial subsidies.
The EU is one of the first regions in the world to implement an energy and industrial policy. European economic integration is the result of coordination of the industrial policies of its member states.
In recent years, the EU has increased its financial support to green industries such as the ‘new trio’ and relevant sectors that promote green development. It has placed a focus on the energy transition and net-zero technology research and development, and made improving global industrial competitiveness one of its main objectives.
The EU’s first comprehensive energy strategy in 2006 already stressed the importance of promoting new energy sectors. The EU’s industrial policy related to the “new trio” has become its key measure to gain a stronger competitive advantage and secure a leading position in the world. In addition, the EU has introduced extensive subsidies, with funding available for at least eleven categories and other means.
While the EU vigorously develops and subsidises its own ‘New Trio’ industries, it takes discriminatory restraint measures towards the products of other ‘New Trio’ countries, so it is worth reflecting on its true motives.
Regarding the EU’s anti-subsidy investigation into Chinese electric vehicles, China questioned the legality of the Commission’s decision to open the investigation ex officio, believing that it was driven by political intentions and constituted a protectionist measure.
The EU has allocated billions of euros to subsidise and build the electric vehicle supply chain in recent years and will continue to provide extensive subsidies to the local electric vehicle industry in the future.
In response to the Commission’s revelations on planned tariffs on electric vehicles imported from China, a spokesperson for China’s Ministry of Commerce pointed out that the Commission’s anti-subsidy investigation procedure for Chinese electric vehicles did not comply with World Trade Organization rules and was an act of “unfair competition” under the guise of “fair competition”.
Currently, the EU has developed a systematic and comprehensive package of measures and coordination strategies for the ‘new trio’ industries on the basis of relevant documents such as the European Green Deal and is seeking to increase the industrial competitiveness of these industries in these sectors through subsidies of various kinds.
On the surface, the EU has enforced legal oversight and prevented Member States from granting state aid that could distort the market. Nevertheless, it has provided for many exceptions. Moreover, under the pretext of facilitating ecological transition and green development, it has constantly expanded the scope of these exceptions, leaving itself and its Member States enough room and flexibility to subsidise their “new trio” industries.
According to data published by the Commission, between 2018 and August 2024, the Commission approved €36.2 billion in state aid under the Important Projects of Common European Interest (IPCEI), a total of 320 projects in the fields ranging from batteries and hydrogen energy to communication technologies and cloud infrastructure and services. In particular, 68 projects were approved for the battery industry, representing a total of 21 percent and with a subsidy of €6.1 billion.
This clearly shows that the EU has spared no effort in implementing supportive measures for the ‘new trio’ industries to remain competitive and take a leading role in emerging sectors at international level.
(The above opinions were taken and translated from an article by Shi Xiaoli and Cui Yunfei of the China University of Political Science and Law.)
(Web editor: Chang Sha, Wu Chengliang)
