What next / course of action for Chinese and European manufacturers

In mid-September, Ursula von der Leyen, President of the European Commission, announced an investigation into China's financial support for its own manufacturers of new energy vehicles (“NEVs”) in the European Parliament in Strasbourg. On Wednesday, 4 October 2023, the European Commission has officially launched the anti-subsidy proceedings pursuant to Article 10 (8) of Regulation (EU) 2016/1037.

I. New battery electric vehicles under investigation to protect the European electric car industry

The products subject to this investigation are new battery electric vehicles, designed primarily to carry nine or fewer persons, including the driver, and propelled solely by one or more electric motors, regardless the number of wheels set in motion.

The anti-subsidy investigation aims to protect fair competition in Europe and prevent distortion of the European market through state subsidies for Chinese electric cars. The investigation will therefore determine whether the NEVs originating in China are being subsidised and whether the subsidised imports cause injury to the European Union industry. If the conclusions are affirmative, the European Commission will examine whether the imposition of countervailing measures such as anti subsidy duties are in the European Union’s interest. The imposition of punitive duties is politically controversial.

II. Ex officio investigation will include Chinese authorities and producers of new energy vehicles

The European Commission has launched the investigation ex officio, i.e. on its own initiative. The investigation is, according to European Commission, prompted by sufficient evidence that the recent flood of subsidised cheap imports of NEVs from China to the European Union poses an economic threat to the EU electric car industry.

The investigation will be concluded within maximum 13 months of initiation. If legally warranted, any provisional anti-subsidy duties may be imposed by 9 months after initiation, with any definitive measures to be imposed up to 4 months later or within 13 months of the initiation of the investigation.

As per legal requirements under EU and WTO rules, the Government of the People’s Republic of China has been invited for consultations by the European Commission. In addition, the EU anti-subsidy provisions also provide for the participation of concerned companies in the investigation as interested parties.

III. How to react? Course of action and participating in the investigation for both Chinese and European manufacturers

Both Chinese and EU manufacturers may be affected by and have the possibility to take part in the investigations. In order to establish whether the EU industry is injured, the European Commission is seeking the cooperation of European Union producers in the investigation. The Chinese producers to be investigated and the unrelated importers and European Union producers to be involved may be selected based on samplings.

The European Commission’s notice of initiation of the anti-subsidy proceeding from 4 October 2023 contains strict deadlines – some of only a week – for participation in the procedure and constitution of the sample. In addition, interested parties such as exporting producers, European Union producers, importers, suppliers and their representative associations, users and their representative associations, trade unions and representative consumer organisations have to demonstrate in written statements that there is an objective link between their activities and the product under investigation.

Our team advises re. EU anti-subsidy procedures on a regular basis and represents clients toward the European Commission and before EU courts.

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