EU's punitive tariffs on Chinese EVs do more harm than good: think tank

China

EU's punitive tariffs on Chinese EVs do more harm than good: think tank

2024-10-11 15:58 Last Updated At：20:27

The European Union's (EU) punitive tariffs on Chinese battery electric vehicles (EVs) are a shortsighted mistake that will do more harm than good and will trigger multiple negative effects on the global auto market, the Brussels-based economic think tank Bruegel said on Wednesday.

The European Commission announced on Oct 4 that it passed a vote to impose punitive tariffs on Chinese EVs, sparking criticism from several European countries and auto industries who warn the move could boomerang against the EU's competitiveness.

Uri Dadush, a researcher with the institute, said in his article published Wednesday that the additional tariff "overstates the problem and will do more harm than good", and will ultimately backfire on the European auto industry.

The article quoted industry insiders as saying that many of the Chinese EVs are produced in joint ventures with EU and US automakers, and the price and quality advantages reflect the advantages of China's related industries in economies of scale, labor costs, battery technology and materials, as well as the full competition and first-mover advantage among Chinese manufacturers.

Dadush said that the high price of EVs in Europe hurts all consumers, especially those with low incomes. Once the EU imposes tariffs on Chinese EVs, many EU citizens, especially those in rural areas, who are willing to make their cars more green and environmentally friendly will find it difficult to achieve their wishes.

The tariff will have also three negative long-term effects, according to Dadush.

First, it may lead to countermeasures from China. China has brought relevant anti-subsidy measures to the WTO dispute settlement mechanism, and the EU may lose the case, as the reasons for the European Commission's request for high tariffs are untenable, and this conclusion has long been a consensus in the industry.

Second, the imposition of tariffs will weaken the motivation of EU electric vehicle manufacturers to cut costs and continue to innovate, as EU automakers still need to compete in China and other fast-growing markets, and the prospect of them gradually falling behind is real.

Third, such decision marks a trade split and further "decoupling" between the Western world and China, leaning to more economic costs uncertainties. "It's not too late for the EU to change its mind," said Dadush in the article.

Japanese protesters rally against arms exports in Tokyo

Japanese citizens held rallies on Thursday outside the headquarters of the Liberal Democratic Party (LDP) and the National Diet building in Tokyo, protesting Japan's weapons export policies.

The ruling Liberal Democratic Party and its coalition partner, the Japan Innovation Party, agreed at a meeting on Monday to revise the implementation guidelines of the Three Principles on Transfer of Defense Equipment and Technology and lift restrictions that limit defense equipment transfers to five noncombat purposes. And they planned to submit the proposal to the cabinet in February next year.

Demonstrators chanted slogans, calling for a complete ban on arms exports, denouncing the ruling parties, and demanding Prime Minister Sanae Takaichi and the cabinet to step down.

"I believe that Japan must never become a 'weapons merchant.' At present, there are already some companies in Japan engaged in weapons-related industries. Not only does the government fail to stop this, it is actually promoting it, attempting to revive the economy in this way. I find this extremely dangerous, and it makes me deeply dissatisfied. I want to make my opposition clear," a protester said.

Another voiced concern over Takaichi's erroneous and provocative remarks on China's Taiwan region.

"Japan has never recognized Taiwan as a country. Under the premise of respecting the Treaty of Peace and Friendship between China and Japan, the Sino-Japanese Joint Statement, and the Potsdam Proclamation, Japan should abide by these documents. But now the Japanese government is ignoring them. Is this a deliberate move, or that Prime Minister Takaichi simply does not understand the contents? This is deeply unsettling. It is totally disrupting the current situation and undermining Japan's position in international relations," said a demonstrator.

A third rally participant said a dangerous shift has been taking place in Japan.

"Recently, some people have started talking about 'possessing nuclear weapons.' In fact, over the past 20 to 30 years, the threshold for such discussions has been gradually lowered. The moral restraints that once hold back these debates, the [right] path Japan should follow, and its commitment to pacifism have been continuously weakened and dismantled. While the situation has worsened sharply due to Prime Minister Takaichi's remarks, this is actually the result of a trend lasting for decades. Both the lawmakers and the public lack sufficient awareness of and reflection on this ongoing trend. I am very concerned about this," another protester said.