The European Commission has agreed with Beijing to cap Chinese hybrid car imports at 350,000 vehicles a year. EU leaders are likely to assess the deal this week, and the Commission plans further trade defence proposals in December.
The European Commission secured agreement with Beijing on Friday to limit hybrid car imports from China to 350,000 vehicles a year, most likely from early December, with a 6% annual increase. The safeguard will last four years and also applies to other EU trading partners.
How the quota works
The cap rests on World Trade Organization safeguard measures, which the EU can implement without the investigations that anti-dumping measures require. Cars above the quota will not face tariffs but will remain blocked in customs at European docks.
Chinese vehicles assembled inside the EU, such as those built in Hungary, fall outside the quota, officials confirmed. EU companies making cars in China do fall under it.
Why Brussels acted
Chinese hybrid exports are on course to reach 800,000 this year, Reuters reported. Chinese customs data shows that exports of hybrids to the EU tripled to €6.7bn in the first half, from €2.2bn a year earlier.
The deal comes amid concern over a £1bn-a-day trade deficit with China. As part of the agreement, China also agreed to drop some tariffs on auto parts and halve duties on EU footwear, olive oil and ice-cream.
What the EU weighs next
According to Reuters, a senior Commission official said: "Dialogue needs to deliver and it has delivered results", but added that dialogue alone looks unlikely to deal with the structural imbalance.
In December, the Commission plans to propose an instrument limiting companies' reliance on a single source for certain critical supplies. Leaders will discuss these and other potential measures at their December 17-18 summit.
Before that, leaders meeting on Thursday will discuss a French-German proposal for a kill switch instrument that would let Brussels block certain goods from the single market.
Sources: The Guardian, Investing.com
Trading involves risk.
Risk Disclaimer
