Lhe European Union (EU) is entering a new era in its relations with its trading partners. The Twenty-Seven approved, on Friday October 4, the introduction of taxes on the importation of electric vehicles from China. This decision is the culmination of an investigation which highlighted the massive public aid from which Chinese manufacturers benefit, in order to be able to produce at unbeatable costs.
Surcharges could go up to 35.3% of the price of the vehicle, in addition to customs duties of 10% already in force. They aim to compensate for practices deemed unfair, which concern the entire manufacturing chain, from mining to the construction of assembly plants, including software development.
Criticized for its naivety in terms of free trade, the EU therefore ended up resolving to take measures to protect its industry. This change in doctrine came at the cost of dissension within the Twenty-Seven. If a majority managed to emerge to vote for the measures proposed by the European Commission, Germany, Hungary, Malta, Slovenia and Slovakia opposed these customs barriers.
On a political level, this decision is an important signal sent to China, because it establishes a new balance of power with a country described as a “systemic rival”. As usual, Beijing tried to divide Europeans by threatening retaliatory measures on a certain number of European exports to China. By not giving in to this intimidation, the EU is showing that its common interests are superior to those of this or that member state.
Economically, we should not expect a miracle from this protectionism. Chinese manufacturers have the possibility of developing circumvention strategies to penetrate the European market. First, the price difference between Chinese and European models is such that part of their range will remain competitive despite the taxes. Furthermore, several projects for Chinese factories on European soil are being realized. These investments will make it possible to avoid customs sanctions decided by the Commission.
Use the same methods
Falling back behind this Maginot line is therefore not a long-term solution. Even if the taxes can offer a temporary respite to European manufacturers, they will not allow them to overcome their technological lag and their dependence on China.
In fact, Europe finds itself in a situation symmetrically opposite to that of China twenty years ago, when the thermal engine dominated. The Chinese have attracted foreign investment, established partnerships, imposed technology transfers, while waging regulatory guerrilla warfare to stem Western domination.
The EU must now use the same methods. The Twenty-Seven can thus require that a significant part of the components of Chinese vehicles manufactured in Europe be of European origin. Forcing them to use locally manufactured batteries would also accelerate the emergence of the sector on the Old Continent. Finally, the sites cannot be reduced to simple assembly hangars, but must become real factories with high added value.
In the balance of power with Beijing, protectionism is not an end, but simply a step and a lever so that Europe can put itself at the level of Chinese competition in order to accelerate the ecological transition.