THE prospect of China and the European Union nearing an alternative solution on the EU’s imposition of extra tariffs on Chinese-made electric vehicles (EVs) will provide a much-needed buffer to avoid the escalation of trade tensions between the two economic powerhouses, analysts said.

China and the EU meeting each other halfway on the tariff issue would not only benefit the EV industry on both sides, but also contribute to the broader bilateral economic relationship, they added.

Bernd Lange, chair of the Committee on International Trade of the European Parliament, told German broadcaster n-tv on Friday that Brussels and Beijing are close to reaching a deal that would see China commit to offering EVs in the EU at a minimum price, although he did not provide any further details on the specifics of the arrangement.

Amid simmering tensions for months over unfounded allegations of the so-called unfair subsidies in China’s EV industry, the EU completed its probe Oct. 29, placing additional tariffs of up to 35.3% on Chinese EV imports for five years, on top of the standard 10% import duty.

Despite the tariff imposition, Chinese and EU technical teams engaged in five rounds of discussions in Beijing from Nov. 2 to 7, as well as video talks in the following week, aiming to reach a potential price undertaking agreement. China Daily quoted an insider as saying that China and the EU reached a “technical consensus” after the talks.

Under this arrangement, China would agree to a mutually acceptable export price and volume for its EVs in exchange for the EU removing the tariff hikes.

According to a report published in April by the International Energy Agency, China currently dominates the battery supply chain, with nearly 85% of global battery cell production capacity.

Meanwhile, the Chinese Government is imposing temporary anti-dumping measures on selected EU brandy imports, as announced by the Ministry of Commerce in early October. The ministry is also investigating into EU imports of pork, pork byproducts and dairy products and considering tariff hikes on imported fuel-powered vehicles with large-displacement engines from the EU.

(SD-Agencies)