Chinese trade boss comes to Brussels on Don’t Tax My Car tour

BRUSSELS — China’s top trade official, Wang Wentao, has been turning up the volume on a whistle-stop tour of the European Union to ward off its threat to tax imports of electric cars but, after well-attended gigs this week in Rome and Berlin, he faces a rough reception at his final appearance in Brussels.
Wang will try once more to convince EU trade boss Valdis Dombrovskis not to slap duties of up to 35.3 percent on electric vehicles that China ships to the bloc, assisted by lavish state subsidies. Wang arrives on Wednesday for talks with industry representatives before meeting with Dombrovskis on Thursday.
But, after nearly a year of tit-for-tat trade retaliation since European Commission President Ursula von der Leyen launched a major anti-subsidy probe, Beijing’s refusal to engage with the EU’s argument that its support for EV-makers harms European industry leaves slim chances for a breakthrough — and betrays its tone-deafness.
“China is stuck,” said a senior Brussels-based trade lawyer.
Wang is, on his travels, trying to assemble a coalition of rogue EU countries that could rebel against the Commission’s duties in an upcoming — and binding — vote. At the same time, he is still pushing for a negotiated solution after the Commission threw out earlier compromise offers.
The trouble is, the two tactics undermine each other.
“If [China] keeps pushing for a negotiated solution, fewer countries will be inclined to vote against” the duties, the lawyer argued.
The set list of Beijing’s trade chief is clear. He’ll most likely go for a combination of Radiohead’s “Idioteque” (the you’ll-miss-your-transition part) and “Let’s Stay Together” by Al Green (the keep-trade-open part).
The crowd reaction at the different European venues, however, differs widely.
Germany’s Economy and Climate Action Minister Robert Habeck struck a balanced tone on Tuesday when he met Wang in Berlin, suggesting the Commission is not the only party that should move.
“The European Commission and China should make every effort to find a negotiated solution,” he said in a statement, adding an important caveat: “[We] embrace competition — but it must be on fair terms.”
Habeck, a leader of the co-ruling Greens, added a standard plea to avoid a “trade conflict.” His tightrope comments on the Commission’s duty push highlight differences with Social Democrat Chancellor Olaf Scholz, who opposes the import tariffs. Because of this, Berlin abstained in July when the duties were up for a nonbinding vote.
In that vote, up to a dozen countries representing over 60 percent of the EU population supported the duties. To block them under EU rules, Scholz would have to rally a larger majority against them — and that would be a tall order.
On his first tour date, in Italy, Wang’s diplomacy seems not to have had the desired effect.
As his Chinese colleague was leaving, Italian Foreign Minister Antonio Tajani said his government “supports the EU’s position” on the duties. He did qualify that by saying Italy would be open to a negotiated solution and Industry Minister Adolfo Urso has been trying to attract Chinese investment into Italy’s struggling automotive sector.
After Spanish Prime Minister Pedro Sánchez visited China last week and told everyone to “reconsider” the duties, it made a lot of sense for Wang to try and convince another major country to do exactly that, which brought him to Rome.
But don’t overstate the importance of Sánchez’s comments, argued economist Gregor Sebastian with the Rhodium Group, a Berlin-based think tank. “Everyone is trying to get themselves out of the retaliation zone. That’s something else than voting against.”
Sebastian says the current staring contest between Brussels and Beijing is not yet a trade war. “It’s definitely tit-for-tat, but no one’s pulled the trigger yet. The major trade flows will not be affected and the import of Chinese EVs will slow down but continue as well.”
The EU has also prevented Chinese carmakers from forming a solid coalition, considering the duties will range from 17 to 35.3 percent, if one excludes non-Chinese producer Tesla.
“It all comes down to the fact the EV producers can live with the level of these duties,” Sebastian added.
With Brussels not wanting to look weak in front of the U.S. — which has slapped an indiscriminate 100 percent tariff on Chinese electric cars — a negotiated solution seems a tall order for Wang. Especially after the Commission rejected offers by the Chinese producers to put a floor on prices or cap volumes of EV deliveries to ease competitive pressure.
Wang will already be back in Beijing by the time the endgame reaches its climax: the vote by EU countries to lock the duties in place for five years. Any day now, the Commission is expected to share its findings formally with the bloc’s capitals.
That moment would trigger a two-act vote. Only if 14 countries vote against the duties in the first round would a second round take place in the so-called appeal committee. The Commission has the advantage in this poll. In the appeal committee, a qualified majority is required to defeat the EV duties. In practice, this comes down to 15 countries representing 65 percent of the bloc’s population.
“I’d assume the Commission wants to avoid an appeal,” the trade lawyer added. So, waiting with informing the member countries “allows the Commission the option to change the findings if needed after they meet with Wang.”
After Sánchez’s apparent flip, it’s no surprise to Sebastian, the analyst, that the Commission is in no rush to hold the vote. “They will want to see how much they need to negotiate with member states.”