Guillermo Moya Barba, PhD Student at Rey Juan Carlos University, Member of ELSRG
On 4 October 2023, the European Commission announced the initiation of investigations in the framework of an anti-subsidy proceeding concerning imports of electric vehicles from China. This news brings into question the coherence between the common European market policy and the objective of achieving a sustainable and low-carbon Union.
The goal of a sustainable European Union
The European Union can be seen as an economic, monetary, security or even legal union. In addition, the European Union has shown that it also wants to be seen as an energy union and a sustainable union, which wants to ensure environmental protection throughout its territory. This path towards a sustainable Union began in the 1970s, in an international context marked by the preparations for the 1972 Stockholm Convention. Over the years, many Community legislative instruments have emerged within the Union. One of the most well-known was the European Green Pact, which is the cornerstone of current European environmental and sustainability policy. It is a road map that has been taken into consideration for the creation of sectoral policies, where one of the main objectives is the creation of an energy union, sustainable and low carbon, able to fight climate change.
China as a trade rival
Over the years, the European Union has found a serious trade rival: the People’s Republic of China. This has led the Union to adopt numerous anti-dumping and anti-subsidy measures[1] against certain Chinese imports. Although not all of them are integrated into the so-called environmental dumping, [2] in recent years these measures have acquired particular importance. This is because the Union’s objective of becoming a sustainable energy union has been hampered by events such as the Covid-19 pandemic, which has seriously damaged national economic structures, and the war in Russia and Ukraine, which has exposed the Union’s energy dependence on Russia. The most recent example is found in the anti-subsidy investigation opened by the European Union concerning imports of electric vehicles from China.
However, the use of anti-dumping by the Union is seen by several analysts as harmful, as they consider that it is used disproportionately and excessively, with a clear predominance of industrial strategies, and to the detriment of economic and commercial needs.[3] We therefore consider it vital to carry out a comprehensive study of the Community’s anti-dumping policy to take account of the environmental point of view, that is to say to analyse whether the European institutions take into account the and to what extent environmental policy has been developed over the years.
The question is the following: is the Union’s environmental policy consistent with the anti-dumping and anti-subsidy measures imposed on imports of certain products from China? In order to answer this question, we must look at some cases of corrective measures imposed on certain key products in the pursuit of the objective of a sustainable and low-carbon Union: solar panels and electric vehicles.
Anti-dumping on solar panels of Chinese origin
In 2012 the European Commission initiated an anti-dumping investigation concerning imports of photovoltaic modules from China,[4] which ended in June 2013 with Regulation (EU) No 513/2013[5] and in December with Implementing Regulation (EU) No 1238/2013.[6]
However, in 2018 the Union ceded ground to China and decided to remove trade barriers to the marketing of such products.[7] The reason for this change is due to the failure of the anti-dumping measures as they did not elicit a significant response from the European producers;[8] China, on the other hand, continued to establish itself in this market while improving the quality of its solar panels. There is currently an excess of solar panel stock in Europe, as European producers cannot compete with low prices for panels from China, which in turn have high quality.[9]
The anti-subsidy investigation of Chinese electric vehicles
The opening of investigations into imports of Chinese electric vehicles was led by France, which has started its own crusade against the sale of such vehicles when they come from China. Other countries, such as Germany, do not fully agree with this measure.[10] The opening of investigations was based on the fact that the production of these cars in China received a large amount of subsidies which made it possible to sell them in Europe at a price much lower than the prices offered by European manufacturers.
Although the transport sector has been one of the priority sectors in Community environmental policy since the early 1980s; the Commission in its opening announcement made no explicit statement on the Union’s environmental policies and described the electric vehicle sector as a strategic sector in terms of innovation, added value and employment.[11]
Conclusion
Anti-dumping remains a mechanism for monitoring the stability of the common market and is therefore based on economic and industrial criteria and demands. In this respect, it would be advisable for the Commission, when imposing anti-dumping duties on certain products that are key to achieving a sustainable Union, to base its decision on economic, industrial and environmental terms.
The decision taken by the Union on imports of Chinese electric cars could have serious consequences for consumers themselves in the face of a reduction in their choice and, above all, given the lack of possibility of obtaining this class of vehicles at low prices. The injection of Chinese capital into this class of products (solar panels and electric vehicles) has increased its level of specialisation to levels to which the Union has difficulty reaching. If the Union wants to compete with China in the trade of these kinds of products, rather than declare war on China (with a high probability of victory), the strategy should be specialisation and support for small producers. At the end of the road should not be found the dispute, but the understanding.
This blog post builds upon the author’s dissertation.
[1] Corrective measures aimed at protecting the European common market from disturbances from imports of goods which are normally priced below the normal value of other similar products.
[2] This concept refers to the use of looser national environmental legislation to obtain competitive advantages over other countries with stricter environmental legislation. Rafael Muñoz de Bustillo y Rafael Bonete. “Introducción a la Unión Europea: un análisis desde la economía”, Alianza Editorial, 2ª Ed, 2000, p. 277.
[3] Jorge Alonso Rodrigo. “La política antidumping de la Unión Europea ¿Instrumento de defensa comercial o herramienta proteccionista al servicio de los grupos de interés?” Universidad de Zaragoza, 2018, p. 30.
[4] European Commission, C 269/5 Notice of initiation of an anti-dumping proceeding concerning imports of crystalline silicon photovoltaic modules and key components (i.e., cells and wafers) originating in the People’s Republic of China.
[5] Regulation (EU) No 513/2013 of 4 June 2013 imposing a provisional anti-dumping duty on imports of crystalline silicon photovoltaic modules and key components (such as cells and wafers) originating in or consigned from the People’s Republic of China and amending Regulation (EU) No 182/2013 making imports of those products originating in or consigned from the People’s Republic of China subject to registration.
[6] Implementing Regulation (EU) No 1238/2013 of 2 December 2013 imposing a definitive anti-dumping duty and definitively collecting the provisional duty on imports of crystalline silicon photovoltaic modules and key components (namely cells) originating in or consigned from the PRC.
[7] Official Journal of the European Union. C 310, Volume 61.
[8] Bloomberg. “Look East for Solar”, 2018. Disponible en https://www.bloomberg.com/news/articles/2018-09-07/look-east-for-solar?utm_content=business&utm_source=twitter&utm_campaign=socialflow-organic&cmpid=socialflow-twitter-business&utm_medium=social&embedded-checkout=true
[9] Xataka. “China has cut the price of solar panels in half. Europe and the US only have to specialize or throw in the towel”, 2024. Available in https://www.xataka.com/energia/china-ha-bajado-precio-paneles-solares-a-mitad-a-europa-eeuu-solo-les-queda-especializarse-tirar-toalla
[10] Forbes. “French Desire for EU Protection From China’s Electric Cars Irks Germany”, 2023. Available in https://www.forbes.com/sites/neilwinton/2023/06/26/french-desire-for-eu-protection-from-chinas-electric-cars-irks-germany/?sh=70459cee5c78
[11] European Commission, C/2023/160 Notice of initiation of an anti-subsidy proceeding concerning imports of new battery electric vehicles designed for the transport of persons originating in the People’s Republic of China.