Customs dispute goes to court: Chinese OEMs take legal action before the CJEU

Three of the largest Chinese car manufacturers and the China Chamber of Commerce for Import and Export of Machinery and Electronic Products (CCCME) are suing the European Commission over the special duties on Chinese electric vehicles that have been in force since October. According to Reuters, the lawsuits reached the court in Luxembourg this week, shortly before the deadline set by the CJEU for filing complaints.

It is not officially known whether there are any other plaintiffs. However, the trade magazine MLex reported on Thursday that the Tesla subsidiary in Shanghai and the German car manufacturer BMW have also filed complaints against the tariffs. Politico now also writes that Tesla is taking legal action. Further details on the content of the objections are not known. However, the South China Morning Post writes that it can be assumed “that the companies are ready to challenge the assertion that certain funds constitute subsidies, the way the subsidies were calculated and the assumption that they caused injury to the EU’s single market.”

The EU imposed punitive duties on electric cars manufactured in China at the end of October following an anti-dumping investigation. BYD will have to pay an extra 17.0 per cent, Geely 18.8 per cent, and SAIC an additional 35.3 per cent – on top of the EU’s standard import duties of 10 per cent. There was a special arrangement for Tesla with a duty rate of 7.8 per cent. Other companies found to be cooperative in the EU investigation will pay 20.7 per cent on top, while those found to be uncooperative will have to pay the maximum rate of 35.3 per cent. The duties were introduced for a period of five years.

At the beginning of November, the Chinese Ministry of Commerce filed a complaint with the World Trade Organisation (WTO) against the special tariffs. In August, while negotiations on the then provisional special tariffs were still ongoing, China had already initiated dispute settlement proceedings before the WTO. Although a negotiated solution was not reached, both sides remained in dialogue – even after the tariffs were introduced in October. At the end of November, it was rumoured that both sides were still close to an agreement based on minimum prices guaranteed by Chinese manufacturers. However, the breakthrough failed to materialise.

As the South China Morning Post now writes, the EU and China have paused talks to resolve the dispute in recent weeks after several rounds of negotiations failed to produce a solution. However, the China Chamber of Commerce to the EU (CCCEU) recently called on Beijing and Brussels once again to negotiate a compromise.

With regard to the lawsuits that have now been filed, EU trade spokesman Olof Gill said: “We take note, and will be ready to defend [the duties] in court.” The European Commission now has just under two and a half months to prepare its defence.

reuters.com, scmp.com, politico.eu (Tesla)