SOURCE / GT VOICE
GT Voice: EU vote shows need to resolve EV trade dispute with China
Published: Jul 17, 2024 11:46 PM
Illustration: Chen Xia/GT

Illustration: Chen Xia/GT

The more the EU faces disagreement over protectionism and free trade, particularly in the electric vehicle (EV) sector, the more enhanced communication and mutual understanding between China and the EU are needed.

EU governments exposed divided views in an "advisory" vote regarding the additional tariffs on imports of China-built EVs, Reuters reported, citing anonymous sources. A dozen EU members voted in support of the tariffs, four voted against and 11 abstained, the sources said.

The vote, while non-binding, is a vivid illustration of the EU's internal contradictions and difficulties in reaching a consensus on adopting a protectionist approach toward China-made EVs. Such divisions underscore the diverse strategies that member states adopt in addressing the challenges of globalization. These differences are intricately linked to each country's adaptability and strategic planning.

Certain member states may be inclined to implement tariffs in order to shield their domestic industries from the effects of external competition, particularly in light of intense competition from emerging economies like China. 

Other member states may hold the belief that while this protectionist strategy may offer temporary protection for domestic industries, it could also hinder market openness and innovation capabilities in the long run. They are of the opinion that engaging in the global supply chain and market competition can drive technological advancements and enhance efficiency within their domestic industries. 

Whether the EU will eventually choose the road of trade protectionism affects the very foundation of the free market it champions, with profound consequences for both its own economic structure and the global trade environment. On one hand, the shift toward protectionism could deepen economic and social disparities among EU nations, potentially undermining the economic and trade cohesion and stability of the union. On the other hand, as a significant player in global trade, the EU's protectionist stance could spark a domino effect of trade barriers worldwide, heightening international trade tensions and disrupting the stability of global supply chains.

High production costs in the EU have prompted many European companies to invest in the US, accelerating Europe's deindustrialization process and deepening Europe's dependence on the US, which undermines Europe's quest for strategic autonomy. It is urgent for the EU to contemplate and reverse its deindustrialization, but a protectionist approach toward Chinese products is clearly not the answer.

As an advocate for free trade and globalization, the EU has long benefited substantially from both trends, with its economic prosperity intricately tied to the openness of the global market. Nevertheless, the emergence of US trade protectionism has placed considerable trade pressure and challenges on European countries, particularly major economies such as France and Germany. 

In this context, the trade policy decisions of the EU affect its own economic interests and have extensive implications for the global trade system.

If the EU decides to increase trade barriers, it could convey a troubling message: The bloc is willing to adopt protectionist policies similar to those of the US. This strategy fails to address current trade disagreements and could also bolster US trade protectionism, leading to a more intricate and unpredictable trade landscape.

Furthermore, if the EU adopts trade protectionist measures, it could prompt the US government to implement stricter trade policies, leading to heightened trade barriers for EU products. This worrisome trend has raised considerable concerns among many in the EU, as it will directly jeopardize the export markets of European companies.

This is why certain member states are urging the EU to consider the varying opinions among member states and strive for a solution that balances the interests of all parties involved in negotiations with China regarding the tariff dispute. It is imperative for the EU to improve internal coordination, as well as for China and the EU to enhance communication and mutual understanding, given the importance of China-EU economic and trade relations. 

Despite the challenges and complexities of China-EU tariff negotiations, this rational approach is crucial in preventing EU tariffs from escalating economic and trade tensions between China and the EU, which will help to jointly promote global free trade.