According to Bloomberg, sources reveal that the EU has decided to send officials to China for additional negotiations to explore alternatives to tariffs on Chinese-made electric vehicles.
The sources indicate that the EU has accepted China's invitation to Beijing, suggesting some progress in discussions between the two sides. However, they also note that reaching an agreement to replace the tariffs, which came into effect on October 30 in the EU, remains complex. Currently, plans are still being finalized and require further coordination with China.
Both China and the EU have been considering whether they can agree on so-called price commitments-a complex mechanism designed to control export prices and quantities as an alternative to tariffs. Nonetheless, both parties acknowledge significant differences in their positions on these price commitments.
So far, eight rounds of negotiations between the EU and China have yielded no breakthrough, as proposed solutions have not yet met the EU's stringent requirements. These include consistency with World Trade Organization (WTO) rules and achieving tariff-equivalent results. Additionally, the EU seeks to ensure that any agreement would be both enforceable and regulatory-compliant.
However, sources indicate some recent progress in negotiations, with both sides exploring whether conditions for price commitments can be simplified, particularly for new models yet to be exported and to avoid risks of "cross-compensation." Cross-compensation refers to instances where the minimum import price of electric vehicles is offset by profits from other products, such as hybrid vehicles.
The EU has emphasized that, under WTO rules, it can establish separate price commitments with different companies. It has been pursuing individual pricing agreements with specific car manufacturers. However, China has cautioned manufacturers against seeking separate deals and instead advocates for a unified general agreement.
On October 30, the EU imposed tariffs of up to 35.3% on Chinese-made electric vehicles, in addition to the existing 10% rate. Despite the tariffs now being in effect, China and the EU still have the opportunity to reach an agreement. Reports indicate that Chinese electric vehicle exports to the EU surged in recent weeks in anticipation of the tariffs, though the tariffs' impact may take time to fully materialize.