EU and China Agree to Reduce Hybrid Vehicle Exports
The European Union and China have reached an understanding to reduce Chinese hybrid vehicle exports to Europe, with expectations of cutting them by more than half over four years.
On Friday, the European Union and China reached an agreement to curtail exports of Chinese hybrid vehicles to Europe, in a breakthrough for negotiations aimed at rebalancing trade between the two sides. EU Trade Commissioner Maroš Šefčovič told reporters that both sides "reached a common understanding to adjust China's exports of hybrid and plug-in hybrid vehicles to the EU," adding that this "opens the possibility of cutting Chinese exports by more than half."
The estimate was based on projections of Chinese export growth over the next four years in the absence of an agreement, and Šefčovič said the move means preventing "millions of car exports from China to the EU." China's Ministry of Commerce highlighted the understanding regarding hybrid vehicles in a 16-point statement, without providing details on the mechanism for restricting exports, merely stating that the two sides "will strengthen communication and cooperation under the trade monitoring mechanism."
Šefčovič declined to clarify whether the deal would allow the EU to impose safeguard measures combining quotas and tariffs, an option Brussels is considering, saying only that the arrangement complies with World Trade Organization rules. As part of the understanding, Beijing agreed to cut its tariffs on €4 billion worth of European goods ranging from olive oil to footwear, saving exporters €225 million.
The deal represents a win for the European Commission, which was under pressure to secure concessions from Beijing, after France and Germany strengthened the commissioner's position by calling for "strict measures" if China failed to curb its export surplus. Šefčovič called the move a "decisive first step, but only a first step on the path toward rebalancing," and the agreement still requires authorization from EU leaders for the Commission to proceed.
What do these terms mean?
Hybrid vehicles: Cars that combine a fuel engine and an electric motor, consuming less fuel than conventional vehicles.
Plug-in hybrids: A type of hybrid vehicle whose battery can be charged with electricity from home, running on electricity for short distances and on fuel when needed.
Tariffs: A tax imposed by a country on imported goods, raising their price in the local market to protect domestic products.
World Trade Organization: An international organization that sets rules for trade between nations and settles trade disputes among its members.
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