China, competitiveness, trade and clean transition dialogue. In her State of the Union speech earlier this month Ursula von der Leyen, the President of the European Commission put forth several topics, which could certainly be crucial for the European automotive industry. But this depends on concrete actions and delivery.
in CLEPA, by Benjamin Krieger, 29-09-2023
China and trade
The announcement of an anti-subsidy investigation into Chinese electric vehicles caught most of us by surprise and confirmed rumours already circulating in Brussels since the beginning of summer. The European Commission is right to be concerned about the competitiveness of EU’s industry and the challenge posed by Chinese manufacturers. However, the significant European investments and business activities in China should also carefully be considered, and not least those of automotive component suppliers.
A decision to impose additional tariffs on electric vehicles from China would almost certainly trigger a strong response from China that could do significant damage to our sector. Meanwhile, pressure to act is high, in light of European political decisions urging for rapid electrification, and the focus should be on strengthening the necessary conditions for such a fundamental transformation. Additional tariffs are unlikely to move us forward in this regard and will not help restore Europe’s competitiveness.
The establishment of an optimised and diversified raw material and battery supply chain, as well as the significant acceleration of charging infrastructure deployment, will be key. Furthermore, policymakers will need to take serious steps towards reducing the administrative burden, strengthening the single market and securing affordable and reliable energy for businesses
Electric vehicles may just be a first step, as other sectors have already been named as potential areas for investigation. This begs the question as to where this will all lead in the longer term, and whether we will manage to “de-risk” rather than “de-couple”, as von der Leyen said. International trade benefits all trade partners, but it needs to be based on rules and reciprocity, ideally, where trade defence instruments send a message that Europe is serious about its demand for a level playing field, but open for trade and investment because its policies reinforce the innovative capabilities of its industry. It remains in Europe’s interest to keep in place the enabling factors that have allowed international trade to significantly grow our economy over the past decades, with the requisite attention to human rights and increased sustainability.
Agenda for the next five years
After all, the competition from China puts a spotlight on Europe’s ability to put in place a framework that facilitates European companies’ ability to thrive on world markets. ‘Competitiveness’ featured prominently in the President’s speech, but whether this leads to improvements for the EU as a production location, with less bureaucratic burden on businesses, more trust in our ability to solve problems with technological progress in open competition and harnessing the best talents remains to be seen. Not all of this can be fixed on EU level, but important incentives can be put in place. Certainly, industry stands ready to contribute and discuss the central pillars of EU policy in the coming five years. It would be a worthwhile exercise to review current rules and measures and determine if more effective and efficient solutions are needed to achieve intended outcomes.
Election Year 2024
Before taking such steps, we will wrap up the current legislative agenda. Debates on important topics, such as Euro 7, CO2 standards for trucks, patents and new legislation for the end of life of vehicles are in full swing. We are eagerly awaiting a proposal for access to data from connected vehicles. Debates which are not concluded in spring next year will be put on hold during the campaign season and election in June. Come July we will know the balance of power in the new European Parliament, the President of the European Commission will have been elected or re-elected, and priorities and candidates for Commissioners will be discussed. If things go as last time, we will be back in full working mode towards the end of 2024, and then we may see more clearly the substance behind the announcements on China and if Europe is willing to act.
CLEPA Secretary General