Xinhua News Agency, Beijing, October 16th News Analysis: China and the EU have proposed three major principles for hybrid vehicles. What do you think?
Xinhua News Agency reporter Xie Xiyao
The large-scale and rapidly growing automobile trade between China and Europe affects the interests and industrial nerves of both parties. Not long ago, China and the EU reached a consensus on consultations on hybrid and electric vehicles, which attracted attention at home and abroad.
Hybrid vehicles are the core area of the current China-EU economic and trade negotiations. Regarding hybrid vehicles, both parties emphasized and confirmed three major principles: "compliance", "respect for facts" and "non-discrimination". Why should we confirm these three principles? How should the various principles be understood?
Let’s talk about “compliance” first.
Industry insiders pointed out that the principle of "compliance" must run through the entire process of resolving China-EU trade frictions and is a top priority.
In 2024, the EU will impose countervailing duties of up to 35.3% on Chinese-made pure electric vehicles on the grounds of so-called "unfair subsidies". Since then, China’s exports of hybrid cars to Europe, which are not affected by this tariff, have grown rapidly.
According to media reports, the EU asked China to voluntarily impose restrictions on the export of hybrid vehicles, but China rejected the request, believing that the so-called "voluntary export restrictions" seriously violated WTO rules.
After asking China for "voluntary export restrictions" to no avail, the EU turned to studying the use of safeguard measures within the WTO framework to control imports by setting quotas.
Against this background, China and the EU have launched intensive negotiations under the trade and investment consultation mechanism.
"It is impossible for China to adopt self-restrictive measures on exports. If the EU insists on taking safeguard measures against Chinese hybrid vehicles, it must abide by WTO rules." said Shi Xiaoli, director of the WTO Legal Research Center at China University of Political Science and Law and a professor at the School of International Law.
It is understood that according to Eurostat data, the EU will import 107,000 hybrid vehicles from China in 2024 and 302,000 vehicles in 2025. In order to safeguard the interests of Chinese enterprises to the greatest extent, since the second half of this year, the Chinese and European negotiating teams have conducted more than 30 rounds of arduous consultations. In the end, the two parties reached an upward arrangement based on 302,000 vehicles in 2025, ensuring that the quota would not be lower than this level and that there would be an annual increase.
"According to the provisions and practices of Article 5 of the WTO's Agreement on Safeguards, the annual quota is usually the average of the last three representative years. It can be seen that reaching this consensus is very rare. This is a breakthrough result under the framework of trade arrangements, which is higher than the usual practice of taking the average of the last three years. It is also a reflection of the flexibility and pragmatism of this China-EU consultation, which is in the interests of both Chinese car companies and European consumers." Shi Xiaoli said.
If the EU fails to fulfill its commitments, China will also take corresponding measures under WTO rules. China and the EU made it clear that "China reserves all rights to resort to dispute settlement and demand trade compensation within the framework of the WTO." Industry insiders pointed out that without the principle of "compliance", "respect for facts" and "non-discrimination" have no foundation, and various consensuses and commitments may collapse at any time due to violations of international rules.
Let’s talk about “respecting the facts”.
To put it simply, the quota arrangement is adjusted upward based on the actual import data of 302,000 vehicles in 2025, rather than setting limits out of thin air.
It is understood that the quota quantity is determined based on the statistical data of the importing country, which is a requirement and practice of the WTO rules. A spokesman for the Ministry of Commerce said that the two sides have reached an upward arrangement on the basis of 2025 to ensure the export space and stable growth of Chinese enterprises and take into account the reasonable concerns of the industries on both sides based on reality.
Finally, "non-discrimination".
"China's quota will not be lower than that of any other European import source" - in this China-EU economic and trade consultation, both sides made it clear that any measures will not specifically target Chinese products, let alone discriminatory treatment of Chinese companies.
According to industry insiders, judging from the past practice of the EU, when it conducts safeguard measures investigation, it has adopted exemption measures for its free trade agreement partners. The China-EU Consensus emphasizes the principle of "non-discrimination", which is to avoid "taking advantage of others".
In its statement, the China Association of Automobile Manufacturers specifically pointed out the need to "jointly maintain a fair, open and non-discriminatory international trade environment."
It can be said that these three principles are the three bottom lines that firmly hold the fundamental interests of Chinese enterprises.
"It is undeniable that in the face of quota restrictions, Chinese car companies are constrained from growing too fast. This forces Chinese car companies to win with quality and strive for more high value-added profit margins, which is also in line with my country's strategic goal of promoting high-quality development of foreign trade." Shi Xiaoli said.
Industry insiders generally believe that in the context of rising trade protectionism and rising uncertainty in the global economic and trade environment, China and the EU, as the world's major economies, resolve their differences through dialogue rather than confrontation, which is a positive signal in itself.
