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on october 4, the european commission submitted high tariffs on china's electric vehicle exports to europe for a vote by eu member states. since it did not reach the legally required "qualified majority voting" (qmv) votes (15 member states and 65% of the eu population), the eu tax proposal was passed by the eu council. this result may bring potential great instability to china-eu economic and trade relations, and may change the development process of china-eu relations as a whole.

the current vote result is not the eu’s final tax plan

although this vote by member states is of great significance and may even play a decisive role in determining the level of tariffs the eu will impose on chinese electric vehicles, it is not yet the final result. based on the relevant legal provisions of the eu's countervailing investigation, the eu's tax measures on chinese electric vehicles have its established procedures, and this vote is a necessary procedure. in addition, member state voting is essentially a decision-making process of the european council, which occupies a core position in the entire eu power system. in view of this, the results of this vote by member states are more critical. however, as a common market and customs union, generally speaking, the eu’s leadership over the external tariff policies of its member states is in the hands of the eu rather than in the hands of the member states. to be sure, it is in the hands of the european commission.

therefore, based on the eu’s complex decision-making system, the distribution of powers among different eu institutions, and the complex power relationships between eu institutions and member states,the current voting results of member states on the proposal to tax china's electric vehicles are not the eu's final implementation plan for taxing china's electric vehicles. although the eu's practical room for making major changes to the current voting results is quite narrow, there is still room for change in theory. possible.

the possibility of changing the outcome of the current vote comes from two factors.first, according to the eu's statutory entire process of countervailing investigations, the eu's final ruling implementation plan must be completed within 13 months after the opening of the countervailing investigation.regarding the eu’s anti-subsidy case for chinese electric vehicles, the eu launched its first investigation in october last year, which means that the eu’s final ruling implementation plan will be completed by november 4 at the latest. therefore, the current voting by member states (i.e., the eu council vote) is a collective statement on the final ruling recommendations made by the european commission, but does not determine the eu's final ruling plan. the decision-making power lies with the european commission. it is particularly important to point out that this eu council vote is a reverse vote, that is, only a valid majority of votes can be rejected. if this number of negative votes is not reached, it will be deemed to be passed. the current results show that the eu's final ruling recommendation has not been rejected by an effective majority, which means that the eu's recommendation has been approved by the eu council. however, the final implementation plan will be decided by the european commission’s final decision before november 4. if the european commission fully coordinates the interests, needs and opinions of different member states based on the current voting results, it may revise the current plan.

second, china and the eu have still not given up on negotiations on the lowest price for electric vehicles exported to the eu, which means that within one month before the final ruling is implemented, the tariff levels for electric vehicles in china may be adjusted or even canceled due to negotiations between the two parties.in addition, the eu's current taxation plan adds provisions for continuing negotiations with china on tariffs after the final ruling, which means that china and the eu may continue to negotiate after the european commission's final ruling, and tariff levels may also be adjusted or canceled after the eu's final ruling. possibility.

based on this, the current eu commission’s tariff plan proposal has been passed by the eu council. the possibility of adjusting or even canceling tariff levels still exists in theory. however, it must be noted that based on the eu launching this countervailing investigation and arbitrarily imposing high tariffs given the motivations and the background of the overall international situation, the possibility of the eu substantially adjusting and canceling tariffs on electric vehicles from china in the final ruling is very low.

the impact of high taxes on my country’s market and its essence

to understand the consequences of this tax (assuming that the final ruling within one month maintains the currently proposed tariff levels), the analysis should be done from both the short and long term perspectives.

in the short term, this will of course have a greater impact on my country's automobile market.although mainland china is the main sales destination for china's electric vehicles and carries the consumer demand for the long-term development of china's electric vehicles, the eu market is becoming an increasingly important overseas sales market for chinese auto companies and is the overseas market with the greatest growth potential. one of the markets. high tariffs will cause problems for my country's electric vehicle exports, especially for car companies that have already regarded the european market as an important overseas sales destination. the implementation of high tariffs may force them to make new production adjustments, which will incur huge costs. and cause loss of profit margin, and lose part of the technology development potential to a certain extent in the short term. eu taxation will also prompt some car companies to relocate their production and sales destinations. to a certain extent, it may cause potential third-party markets to worry about my country's capital and goods. this will cause my country's car companies to encounter problems from the eu market and non-eu markets in the short term. double impact on the market (see jian junbo: "european and american protectionism induces signs of following the trend, how chinese companies can optimize their strategies for entering third-party markets").

but in the long run, high tariffs cannot fundamentally prevent the continued development of electric vehicles in my country.although there will be a negative impact in the short term, in the long run it will stimulate the innovation ability and pioneering spirit of our country's car companies and find new growth points from markets outside europe. over time, in the international market that has been disrupted by the eu's high tariffs, it will after restructuring, china will complete its new market layout and find an integrated solution for its production, r&d and sales in the new economic landscape.

in the final analysis, electric vehicles are the right direction for the development of private passenger cars and are in line with the historical development trend of global green development and response to climate change. however, the eu protects its uncompetitive automobile market by vigorously blocking chinese electric vehicles, and cannot truly solve the energy dilemma in the near future and therefore slows down electric vehicle research and development (for example, germany insists on developing biomass energy to retain gas tank power system), thus gradually falling into a passive position in the competition in the international automotive field, which further highlights the competitive advantages of china's electric vehicles.

in short, eu taxation will cause chinese electric vehicles to encounter certain challenges in the short term, but in the long term it will not block the development of chinese electric vehicles. however, to a large extent, the implementation of high tariff measures may become a template for the eu to deal with china-eu economic and trade relations in the field of competition in the future, and further weaken china-eu political mutual trust, thereby affecting or even changing the development course of the overall china-eu relations.

the reason why the eu insists on doing this reflects that the eu's handling of economic and trade relations with china is increasingly compliant with its competitive goals and geopolitical confrontation goals, and therefore reflects the essence of its insistence on implementing high tariffs.

obviously, the eu has launched a countervailing investigation process against china's electric vehicles and may eventually implement high tariffs out of typical trade protectionist wishes. although france and other countries support the eu's anti-subsidy investigations and taxation measures in the name of the so-called "china's violation of wto rules", in fact, the eu (and france, etc.)'s measures to advocate taxation on china are truly contrary to wto principles. . its tax levels were much higher than wto recommendations, and its reasons for launching an investigation were weak. so far, the precise definition of china’s subsidies for electric vehicles has not been fully revealed in the eu investigation. even the wto does not oppose reasonable subsidies. the eu has not provided a reasonable and specific explanation for the so-called chinese "subsidies" it has identified, but only a unilateral confirmation. this means that the basis for the so-called "improper subsidies" behind its high tariffs on china is not sufficient.

therefore, "improper subsidies" defined based on its unilateralism rather than multilateralism, and the "high tariffs" that are likely to be implemented as a result, are essentially protectionist measures with insufficient legitimacy and interfere in inappropriate ways. international economic competition attempts to curb the competitive advantages of chinese products and industry development advantages, which is a political decision taken to maintain its own industry and even industrial advantages.

the measures taken by the eu against chinese electric vehicles may seem like "supporting justice" and restoring fair international competition, but in fact they are an abuse of wto rules and are intended to protect european local car companies with low competitive advantages, although the effect of this may be not ideal. mercedes-benz president ola källenius made it clear at the recent berlin global forum that the eu's protectionist measures will not bring competitive advantages to german car companies.

since the eu's decision is based on political purposes, its electric vehicle policy towards china is actually part of its geopolitical competition and even confrontation with china.judging from the development trend, the competition between china and europe in products, departments and even the entire manufacturing industry is becoming increasingly fierce and obvious. through its actions in the field of electric vehicles, the eu is previewing the handling model of all chinese products in the competitive field to some extent. it has a strong demonstration effect.in the future, the eu can address eu concerns by imposing similar measures on competing products from china as it does on chinese electric vehicles. this will allow the eu to reduce operating costs and may reduce the complexity of such investigations through legislative procedures. therefore, in the future, the eu may adopt more convenient rules to adopt a large number of protectionist and discriminatory measures against chinese products in the name of countervailing, anti-dumping or based on differences in human rights, environmental protection, safety and standards.

the ultimate goal of the more frequent but more convenient implementation of protectionist measures against china is to safeguard the eu's product, technological and economic advantages, maintain its high-level status in the global value chain, and maintain its role in the global economic system. maintain its dominant position, thereby maintaining the entire western rules-based liberal international order and the west’s core position in the world. this is the essence behind the electric vehicle dispute between china and europe. even if this is not the most direct purpose of the eu, it implies this causal relationship.

what to do?

first, before the eu implements the final arbitration package, china and the eu still have one month to negotiate.to a certain extent, the result of the eu council vote has become a tool to put pressure on china in the continued negotiations between the eu and china. however, china should not be coerced by this result, but should be transformed into a factor for continued active coordination within the eu.

obviously, china will not recognize the so-called voting results, because from a procedural point of view, this is an internal matter within the eu, not a matter of china-eu relations. china will only make substantive reactions to the decisions made by the european commission. in other words, in response to the current eu council decision, china only needs to make a low-intensity response such as appropriate expression of position, focusing on the continuation of negotiations within a month and the reaction after the negotiations may break down.

however, the negotiations between china and the eu should not only focus on electric vehicles, but should make the rules of the entire competitive field another focus of the negotiations. theoretically, the focus of the eu's accusations against china is china's violation of so-called "rules" and its anger at the failure of so-called wto rules. based on this, china can negotiate on the reshaping of trade rules between china and europe and seek competition rules acceptable to both parties. this will lay the foundation for the resolution of conflicts in a large number of potential competitive areas in the future.

second, if the eu completes the final ruling before november 4 and begins to impose high tariffs, china should take reciprocal countermeasures to safeguard the interests of the chinese market and enterprises, and cannot be arbitrarily suppressed by the eu without any response.although a trade war is not the fundamental way to solve the problem, it will make the eu scrupulous in the short term and reduce its willingness to continue to provoke a potential and larger-scale trade war. this is the inevitable path to "ending war with war."

obviously, china cannot carry out highly precise countermeasures against european products in the short term. for example, considering that france voted in favor and germany voted against in the council vote, china will target french products instead of german products. . and even if precision strikes are possible, they may not be able to do so all the time, because even the countries that vote against may be motivated by fear of chinese retaliation, rather than based on our country's friendly stance towards it, although they also oppose protectionism. to deal with competition issues. in short, the attack on eu goods and industries requires dynamic adjustment and taking advantage of the situation, and appropriate response based on the reactions of different eu industries and the markets of each member state.

third, enterprises need to adopt diversified means to respond. it includes: continuing to appeal to the eu and seeking possible understanding; if there is no minimum price, offset the loss of price advantages caused by high tariffs by lowering export prices, continue to maintain and expand market share in europe; cultivate and expand third parties market’s vehicle consumption capacity; avoid eu tariffs through the third-party market and continue to export complete vehicles to the eu; car companies or parts companies invest directly in europe to avoid eu tariffs and gain more advanced management experience; through cooperation with eu high-quality vehicles joint operations and cooperation between enterprises to implement joint production and sales of vehicles; and it is necessary to export parts and carry out vehicle assembly in eastern europe and other places to ultimately realize the export of chinese automobile companies to europe, etc.

many chinese companies have been going overseas for many years, but they still encounter many obstacles.in the past, it was mainly tested by risks such as regional instability, but now it is directly faced with challenges brought by geopolitical competition.in the future, chinese overseas companies must not only continuously improve the quality of their products and enhance their competitive advantages, but also attach great importance to governance levels in the fields of human rights, environmental protection and the entire esg field, jointly promoting chinese companies to become leaders and benchmarks for global multinational companies. as long as this is achieved, no matter what protectionist measures the european side or other countries take, they will not cause any substantial harm to our companies and markets. therefore, being yourself and following your own path is the only correct road to internationalization and globalization.