The Brief – Let China pay for our green transition – EURACT…

With the European Commission’s announcement to investigate whether China is unduly supporting its burgeoning electric vehicles industry, the enthusiasm with which politicians embrace protectionism is becoming worrisome.

Europe, where banana imports from the bloc’s former colonies once enjoyed preferential terms, has learned one important lesson in its storied history: Free and fair trade is the foundation of wealth. Similarly, the EU once learned that when the state dictates to industry, it tends to fail.

Increasingly, however, these lessons seem lost.

“We want a European Green Deal, not a Chinese one,” said Manfred Weber, the leader of the European Parliament’s largest political group, the conservative European People’s Party, while addressing the bloc’s increasingly powerful legislative body.

What Commission President Ursula von der Leyen merely alluded to in her State of the European Union speech last Wednesday – anti-dumping tariffs on Chinese EVs – Weber whipped into a broadside against Beijing. 

“The European Union must not be naive,” he told ZDF: “Anyone who sees today’s prices knows that the Chinese are subsidising their electric cars.”

His questionable analysis aside – state support for industry is commonplace anywhere – the Bavarian politician appears to be motivated by a devotion to “his” nation and the automobile, rather than defending the benefits for consumers and the European citizens, as he ought to.

Remember that alleged Chinese subsidies to EV producers are a direct welfare transfer to EU consumers (and the shareholders of carmaker BYD). Few European companies produce cheap and affordable EVs – a gap that the newcomers are too happy to fill.

The Chinese are not doing this pro bono – the central planners in Beijing decided that doing so would be worthwhile despite the costs.

China, desperately pursuing tangible national rejuvenation and attempting to future-proof its manufacturing business, has sought – and claimed – absurd levels of dominance in some clean tech sectors. 

This has sparked some concerns from Paris to Berlin. Europe’s announced EV probe is just a response to existing sentiment. It’s not the first time it has been tried, either.

When the EU levied anti-dumping tariffs on Chinese solar panels in 2013, solar PV installation rates collapsed (see graph).

Do these anti-dumping tariffs make sense?

The good news is: Solar panels are not missiles, and neither are EVs. We don’t need to desperately uphold our ability to produce them. They are not a matter of national security.

Defending fair trade, as the Commission set out to do, is fair and proportionate. But to aim to wall off Europe from Chinese imports would be the essence of foolishness.

Europe can’t risk a similar outcome with the tender sprout that is the upshot in EV uptake. For one, unless EV registrations increase tenfold this decade, the 200 million tonne CO2 gap in Germany looks impossible to fill by 2030.

Weber would be well advised to move past his nationalist instinct to fetishise the automobile industry and realise that imports, even some level of Chinese dominance, are not intrinsically a threat. 

Make no mistake: All automakers are going electric, and few will close down entirely as the industry transitions.

Some may suffer more than others, but few will be allowed to go bust. The Obama administration bailed out General Motors. Seoul is unlikely to let Kia go, just as Germany will never let Volkswagen go under.

And unlike with Russian gas, once the EVs are sold and transferred to Europe, Beijing won’t be able to simply turn off the tap. Chinese solar panels are not connected to a killswitch in Beijing. Should China turn hostile, we could still manage.

The cheapest safeguard is ensuring Europe has access to sufficient supplies of key minerals and batteries to ensure our own supply in the worst case – something already being done.

Under the EU Battery Regulation, old Chinese batteries will be stripped for critical materials, which will be kept in the EU supply chain. We’ll hang on to the lithium and the like. Mines are opening.

This anti-China rhetoric is mere electioneering. But it is revealing. Because Weber and his ilk seemingly don’t care about consumer welfare.

Much like the French, who recently went to great lengths to block a US competition economist with a strong focus on consumer welfare from a senior EU posting. With support from the EPP boss.

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The Roundup

Poland does not fear repercussions from the EU or the World Trade Organisation (WTO) for its decision to impose a ban on Ukrainian agricultural goods unilaterally, Polish agriculture minister Robert Telus told EURACTIV in an exclusive interview. 

A number of EU agriculture ministers expressly welcomed the idea of a strategic dialogue on agriculture put forth by European Commission President Ursula von der Leyen, though some lamented that it was not started earlier in the mandate.

The European Commission is considering giving fresh funds from the EU’s agricultural reserve to Slovenia and Greece after the disastrous extreme weather events there, but other EU countries are increasingly questioning the way the fund is being used.

New cash incentives to help consumers purchase an electric vehicle (EV) will be rolled out in France as of January 2024, aiming to support French and European carmaking industries in their competition with Chinese rivals, the government announced on Monday.

In a bid to attract more microchip manufacturers to the country, Germany plans to invest some €4 billion in 31 microchip projects with the help of EU funding.

Platforms and data regulation, AI research and innovation, cross-border flows of industrial data and the safety of online products were at the heart of the European Commission’s High-level Digital Dialogue with China, held in Beijing on Monday.

China’s ambassador to the EU made a strong appeal to the West on Tuesday not to try to thwart Bejing’s Belt-and-Road Initiative (BRI) with competing projects, warning that this would antagonise the Global South.

Greece’s main opposition force, Syriza, must remain united after the internal elections on Sunday to be able to “take down” conservative Prime Minister Kyriakos Mitsotakis, an official of the EU Left told Euractiv amid growing internal tensions in the leftist Greek party.

Despite some progress, more work is needed in the development of offshore renewable energies to achieve Europe’s ambitious ‘blue’ coastal economy targets, a report by the European Court of Auditors (ECA) found.

Don’t miss this week’s Transport Brief: Von der Leyen hails Maersk’s 100% methanol-powered ship.

Look out for…

  • UN General Assembly in New York until Friday.
  • Budget Commissioner Johannes Hahn participates in plenary session of European Economic and Social Committee on mid-term revision of EU’s 7-year budget, on Wednesday.
  • Enlargement Commissioner Olivér Várhelyi in Berlin on Wednesday.
  • Climate Ambition Summit in New York on Wednesday.

Views are the author’s

[Edited by Alice Taylor/Zoran Radosavljevic]

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